Disciplinary Newsletter

IMPORTANT NOTICE: Audit and record keeping policies, and Part 6 of the Commission By-law have been updated as of January 2025. This newsletter references outdated content, in accordance with the versions in effect at time. For current information, click HERE.

December 2013

Volume 5 Issue 2

About the Commission’s Discipline Process

The Nova Scotia Real Estate Commission is responsible for the administration of the Real Estate Trading Act and the Commission Bylaw. Part of that responsibility is dealing with public complaints about a brokerage or an industry member.

Complaints are investigated by the Commission’s compliance staff. While complaints typically originate from a specific event or circumstance, the compliance staff reviews all events and paperwork surrounding the transaction. The compliance staff prepares an investigation report for each case, which is then reviewed by the registrar. The registrar determines whether there was a breach of the Act or Bylaw and in cases where there was a breach, recommends charges and penalties. The cases are then presented to the Complaint Review Committee who may reject or approve the registrar’s decision.

After the committee reviews the cases and approves the proposed charges, the industry member is sent a statement of allegations and a settlement agreement. If the industry member accepts a settlement agreement, the industry member must satisfy the penalty imposed.

If the industry member does not agree with a settlement agreement, then the matter is referred to a full discipline hearing. After the Commission’s and witnesses’ evidence has been examined and cross examined at a hearing, the Hearing Panel decides whether the industry member is guilty of any of the charges brought forward at the hearing. The charges may include those proposed in the settlement agreement, but are not necessarily limited to those charges. If they are found guilty of any of the charges, there is then an opportunity for both the Commission and the industry member to speak to appropriate penalties.

An industry member has the right to appeal the decision of the Hearing Panel to the Nova Scotia Court of Appeal, should they wish to and if there are grounds to do so.

In This Issue

About the Commission’s discipline process
Poor paperwork, missing signature
Poor paperwork, extending an expired agreement
Unlicensed trading
Poor paperwork, verbal agreements
Not in best interest, misleading advertising
Failure to provide duty of care
Failure to disclose, to follow lawful instructions
Poor paperwork, false statement
Verbal negotiations and expired contracts
Poor paperwork, failure to provide duty of care
Misleading advertising
Unprofessional conduct as a principal
Failure to understand and explain agency
Unprofessional conduct
Failing to provide brokerage with documents
Poor paperwork
Advertising without authority
Poor paperwork, extending expired agreements
Poor paperwork, poor handling of transaction brokerage
Unlicensed trading
Brokerage audits—strike three, four, and five

Case Overview: Poor Paperwork, Missing Signature

The Commission received a written complaint from a seller unhappy with the actions of the buyers’ salesperson on the sale of the seller’s home. The seller claimed that the buyers’ salesperson was unprofessional and incompetent. Specifically, the seller alleged the salesperson did not include a purchase price on the agreement of purchase and sale, forgot the closing date, removed the key after the pre-closing inspection and accused the seller of taking property out of the house that was meant to stay.

The Commission investigated the complaint and found insufficient evidence to support a charge of unprofessional behaviour and accepted the industry member’s explanation for the mix-up with the closing date. The investigation did reveal poor paperwork, including submitting an offer with no purchase price, failing to document inclusions, and failing to sign the buyer designated brokerage agreement on behalf of the brokerage.

Results

The salesperson was charged with violating Bylaw 702 Article 2 for failing to include a purchase price, Bylaw 702, Article 11, for failing to sign the buyer-designated brokerage agreement.

Penalty

The salesperson was fined $500 for violating Bylaw 702 Article 2, $400 for violating Bylaw 702, Article 11, and received a warning letter for failing to document inclusions. The salesperson was also ordered to complete a course requirement.

Case Overview: Poor Paperwork, Extending an Expired Agreement

The Commission received a complaint from unsuccessful buyers about the conduct of the associate broker that listed the property they tried to purchase. The complainants alleged they had a verbal agreement with the seller, which the listing associate broker did not honour and instead favoured the offer from one of the associate broker’s clients. The complainants alleged the associate broker did not protect the interests of the seller when the seller accepted an offer that was substantially less than their offer, and that they heard after-the-fact that the associate broker waved the commission to make the sale happen. The complainants also believed that the associate broker was one of the buyers.

The Commission investigated the complaint and found that the complainants were given ample opportunity to present a condition-free offer to the seller, which they did not do until several hours after negotiations began between the successful buyer and the associate broker. Based on the statement by the seller, the seller was fully aware of the complainant’s offer and chose to accept an offer they felt was more attractive. There was no accepted verbal offer; the seller said they would consider the complainants’ offer provided it was submitted “condition free”. The evidence did not support that the associate broker presented the offer from their own client more favourably than the offer presented by the complainants.

The associate broker was not one of the buyers and remuneration was as specified in the seller brokerage agreement.

The investigation did reveal the associate broker did not sign the seller brokerage agreement on behalf of the brokerage, and extended the expiry date of the seller brokerage agreement after the agreement expired.

Results

The associate broker was charged with violating Bylaw 702, Article 11, for poor paperwork.

Penalty

The associate broker was fined $400 for violating Bylaw 702, Article 11, and ordered to complete a course requirement.

Contracts Need to be Signed by All Parties to the Agreement—Including Brokerage Agreements

A brokerage agreement, whether seller or buyer, is a contract and agency agreement between the client and the brokerage. The client receives the services of the brokerage in exchange for the remuneration specified in the agreement. To be considered a valid contract, brokerage agreements must be signed by all parties to the agreement. In the two cases on this page, neither salesperson signed on behalf of the brokerage, putting the brokerage remuneration at risk, in addition to violating the Bylaw.

An Expired Agreement is a Dead Agreement

If an expiry date needs to be extended in a brokerage agreement, the extension must be executed, in writing, before the original deadline expires. The reason for this is once a contract expires, it ceases to exist. This is universal in contract law. For example, when a labour contract expires, neither employer nor employee can revisit the contract and make changes to the benefits and wages that were paid out under the terms of the contract. Likewise, when a cell phone contract expires, neither the provider nor the subscriber can go back and request modifications.

Case Overview: Unlicensed Trading

The Nova Scotia Association of REALTORS® contacted the Commission requesting the licence status of a salesperson who terminated their licence four months earlier. The salesperson appeared on a brokerage website as licensed and had listings advertised on realtor.ca. The Commission licensing officer contacted the broker and told them to remove the salesperson from the website immediately because the industry member was unlicensed. The broker explained that they sent the paperwork to the Annapolis Valley Real Estate Board (AVREB) to transfer the salesperson’s licence.

Results

The industry member was charged with violating Real Estate Trading Act Section 4(1) for trading without a licence. The broker was charged with violating Bylaw 704(f) for permitting an unlicensed person to perform duties restricted to licensed industry members.

Penalty

The salesperson was fined $750 for violating Real Estate Trading Act Section 4(1). The broker was fined $1,000 for violating Bylaw 704(f).

Case Overview: Poor Paperwork, Verbal Agreements

The Commission received a complaint from a buyer about the conduct of the salesperson who listed the property the buyer attempted to purchase. The unsuccessful buyer claimed the listing salesperson acted unprofessionally and, in their opinion, illegally. The complainant was upset because they never received a written rejection of the offer, and the property sold for $5,000 less than they were prepared to offer. The complainant also noted the property was sold by another salesperson at the same brokerage and they believed the listing salesperson was doing favours for their colleague and keeping the commission in house.

When the Commission investigated, the evidence did not support the allegation that the listing salesperson acted unprofessionally by not rejecting the complainants offer in writing. The sellers rejected the offer, and that rejection was communicated to the complainant’s salesperson. The evidence also did not support the complainant’s allegation that there was collusion to keep the transaction within the brokerage. All offers were presented; including verbal offers.

The investigation did reveal the salespeople engaged in verbal offers. The complainant’s salesperson offered verbally on the property, which the listing salesperson communicated to the sellers and verbally conveyed the seller’s rejection. It is important to note that verbally rejecting an offer is not engaging in verbal offers. However, the listing salesperson did engage in verbal offers with the salesperson representing the successful buyers by conveying a verbal counteroffer.

The investigation also revealed changes to the accepted offer that were not initialed by all parties and while under transaction brokerage, the listing salesperson failed to act as an impartial facilitator by advising the sellers to counter the second buyer’s offer with a higher price. When parties enter into transaction brokerage, the industry members involved in the transaction can no longer advocate on behalf of one party.

Results

The salesperson was charged with violating Bylaw 702, Article 11, for engaging in verbal offers and not obtaining initials on changes to the agreement of purchase and sale; and violating Bylaw 721 (d) for not treating the interests of both parties in an even-handed and impartial manner.

The salesperson representing the successful buyers was charged with violating Bylaw 702, Article 11, for engaging in verbal offers and not obtaining initials on changes to the agreement of purchase and sale.

The salesperson representing the complainant left the industry and refused to cooperate with the investigation. Should the salesperson wish to re-license they must first address the allegations raised during the investigation.

Penalty

The salesperson was fined $750 for violating Bylaw 702, Article 11 and $400 for violating Bylaw 721 (d), and ordered to complete a course requirement.

The salesperson representing the successful buyers was fined $400 for violating Bylaw 702, Article 11, and ordered to complete a course requirement.

What’s Wrong with Verbal Offers?

There are a number of issues resulting from industry members engaging in verbal offers.

Verbal offers violate the Real Estate Trading Act, which requires all offers to be in writing.

The Statute of Frauds requires land transactions to be in writing.

The legal requirement to have contracts to purchase and sell land in writing and signed by the parties to the transaction, means a verbal contract is unenforceable.

Handling Verbal Offers

If an industry member is representing a buyer, the industry member must tell the buyer they can’t engage in verbal offers.

If an industry member is representing a seller and a verbal offer is conveyed by a buyer’s industry member, tell the seller what was offered and tell the buyer’s industry member to put it in writing because no verbal counter offer or acceptance will be forthcoming.

In terms of disclosure regarding multiple offers, a verbal offer does not constitute an offer requiring disclosure.

Case Overview: Not in Best Interest, Misleading Advertising

The Commission received a complaint from sellers who said the salesperson that listed their property misrepresented them and that neither the salesperson nor the salesperson’s broker would speak to them when the sellers received a notice of claim from the buyers of their property. The buyers were suing the sellers because the property they purchased was advertised as having “an in-law suite with rental income potential”, when the property was actually zoned R1, permitting only a single-family dwelling.

When the Commission investigated the complaint, the investigator found the property was advertised as having an in-law suite and rental income potential. The signed PCDS indicated the property conformed to municipal bylaws and regulations concerning the existing zoning, that there was supporting documentation and that the documentation would be provided to the buyer. The salesperson claimed the sellers knew the unit was illegal, and told him such when listing the property; however, this conversation could not be substantiated. The evidence did support that the salesperson did not independently confirm the legality of the unit, because the salesperson stated they knew it was illegal all along. Despite this, the salesperson advertised the property as having an in-law suite with income potential. As for the PCDS stating the property conformed to municipal bylaws and regulations, and that there was supporting documentation to prove it, the salesperson stated the sellers completed the PCDS and they did not review the completed document.

The complainants alleged that the salesperson and their broker failed in their duties to represent them after the sale had closed; however, duties of agency, except confidentiality, expire when the agency contract expires.

Results

The salesperson was charged with violating Bylaw 708 (a) by creating misleading advertising stating an R1 dwelling had an in-law suite with rental potential; and violating Bylaw 702, Article 2, for not acting in the best interest of their clients for failing to review the PCDS. Based on this complaint, the buyers’ salesperson was subject to a separate investigation, which is documented in the following case (Failure to provide duty of care).

Penalty

The salesperson was fined $750 for violating Bylaw 708(a) and $400 for violating Bylaw 702, Article 2.

What is Misleading Advertising?

The Commission receives complaints about advertisements that are perceived as misleading. In determining whether or not an advertisement is false or misleading, the Commission considers both the literal meaning of the advertisement and the general impression it creates. This is the same approach as that taken by the Courts and other law-enforcement organizations. An advertisement is considered misleading when it makes a representation or claim that is false or misleading in a material respect.

An advertisement may be considered misleading even if it is not demonstrated that a consumer was actually misled. It is only necessary to show that the advertisement is capable of misleading a reasonable consumer.

In this case, the listing salesperson indicated that the property had income potential, which was false. The property zoning was for a single-family dwelling

Case Overview: Failure to Provide Duty of Care

The Commission opened an investigation into the conduct of the buyers’ salesperson from the previous case (Not in best interest, misleading advertising). The Commission alleged that a salesperson failed in their fiduciary duties by not confirming, or advising their clients to confirm, the land-use Bylaw for the subject property. The Commission alleged the salesperson failed in their fiduciary duties when they did not obtain (or attempt to obtain) the documentation that was supposed to be provided as per section 8 of the property condition disclosure statement.

The evidence supported the allegations. The salesperson’s defense was that they were not educated on their duty to, or advise their clients to, confirm land use bylaws and zoning. The evidence showed that the salesperson had been through the salesperson’s licensing course and subsequent continuing professional education courses in which this topic was covered. It was the position of the Commission that reasonably prudent industry members ought to know their obligations, both as agents for their clients and as licensees under the Real Estate Trading Act.

The seller was to provide the buyer with documentation on the land-use bylaw, but the buyer never received the documentation and their salesperson never requested it. It was the position of the Commission that the buyer’s salesperson had a duty to review the PCDS with their client and identify items such as the land-use documentation in the fulfillment of Bylaw 702, Article 2, which states that industry members are to protect and promote the best interest of their client.

Results

The salesperson was charged with violating Bylaw 702, Article 2, for not protecting and promoting the best interests of their client when they did not attempt to obtain the documentation as per the PCDS; and violating Bylaw 702, Article 10 for not discovering facts pertaining to the subject property, which a reasonably prudent industry member would discover in order to avoid error, misrepresentation, or concealment of pertinent facts.

Penalty

The salesperson was fined $500 for each violation ($1,000), and issued a letter of reprimand.

Who is Responsible for Verifying Zoning?

The answer is both the listing industry member and the buyer’s industry member.

The listing industry member is obligated to discover facts about a property to avoid errors, misrepresentations and concealment of pertinent facts. As well, the listing industry member must ensure a true presentation in all advertising. This includes providing the correct zoning information.

The buyer’s industry member is responsible for locating suitable properties for their client, as well as discovering any relevant facts about any property for which the buyer is considering making an offer.

Case Overview: Failure to Disclose, to Follow Lawful Instructions

The Commission received a complaint from an unsuccessful buyer about the listing salesperson of the property the buyer attempted to purchase. The complainant alleged the salesperson acted unprofessionally, did not disclose a relationship with the seller, and cut the complainant out of a transaction in favour of their own client and financial benefit.

When the Commission investigated, the investigator found the complainant’s offer was subject to the sale of their current property (SOBP) and accepted by the seller. The contract gave the complainant nine days to unconditionally sell their house. The complainant’s house sold unconditionally on day two and verbal notice of the sale was given to the listing salesperson. On day five, a second offer was accepted on the property and the complainant was given 24 hours to waive the SOBP. The complainant’s salesperson submitted the SOBP removal schedule the same day, however, proof of financing was not provided until three days later. When proof of financing was received, the listing industry member told the complainant’s salesperson that the transaction was terminated because the letter of financing was not provided within the 24-hour period to waive the SOBP per the terms of the SOBP schedules.

The investigator found no evidence that the listing salesperson acted unprofessionally. The listing salesperson was instructed by the seller to follow the instructions of the seller’s lawyer. The seller’s instructions were lawful and agency requires a salesperson to follow the lawful instructions of their client. Both buyers were represented by different brokerages so there was no financial benefit to the listing salesperson regardless of which buyer purchased the property. The only issue with the listing salesperson was not disclosing the seller was a family member.

The investigator did find evidence that the complainant’s salesperson did not act appropriately in the transaction. The complainant’s property was sold on day two and the complainant instructed the salesperson to remove the SOBP that day, however, the salesperson did not submit the SOBP removal schedule until three days later. The salesperson, acting on the advice of their broker, also advised the complainant that the letter of financing did not have to be provided until the financing date in the agreement of purchase and sale.

Results

The listing salesperson was charged with violating Bylaw 702, Article 21, for not disclosing the seller was a relative to the buyer in writing.

The complainant’s salesperson was charged with violating Bylaw 702, Article 39 (a), for not following the lawful instructions; and violating Bylaw 702, Article 6, for not rendering skilled and conscientious service.

The broker was charged with violating Bylaw 704 (c) for not adequately supervising their salesperson when they sought the broker’s advice on the SOBP waiver schedule and financing letter.

Penalty

The listing salesperson was fined $400 for violating Bylaw 702, Article 21.

The complainant’s salesperson was fined $750 for violating Bylaw 702, Article 39 (a) and $500 violating Bylaw 702, Article 6, and ordered to complete a course requirement.

The complainant’s broker was fined $500 for violating Bylaw 704 (c).

Waiving SOBP Schedules

In this case, the salesperson relied on the financing date in Part 1: Common Clauses to provide proof of financing. The problem with that is the financing clause in the SOBP waiver supersedes the financing date in the agreement of purchase and sale. The reason for this is buyers may choose to waive the SOBP condition without the sale of their property, in which case, proof of financing is of significant importance because the buyer may be responsible for mortgages on two properties. The clauses also impose different obligations of the buyer.

The SOBP clause gives the buyer a set amount of time to waive the SOBP condition and proof of financing must be provided before the condition can be waived.

The financing clause in Part 1: Common Clauses requires written notice only if the buyer has not obtained satisfactory financing by the date in the agreement. The requirement is simply written notice, not a letter of refused financing from a financial institution.

In situations where a buyer’s offer is contingent on waiving the SOBP, it is of the utmost importance to fulfill all the requirements within the allotted time period. Otherwise, as demonstrated here, a seller can terminate in favour of another offer.

Case Overview: Poor Paperwork, False Statement

The Commission received a complaint from a buyer about the conduct of the listing salesperson of the property the buyer attempted to purchase. The salesperson representing the complainant submitted an agreement of purchase and sale on the subject property and told the complainant that the listing salesperson said the price, closing date, and terms were acceptable to the seller, and that they would have the signed paperwork by the end the day. They did not hear from the listing salesperson for two days. On the second day, the complainant called anonymously acting as an interested buyer. When asked about the property, the listing salesperson said there were no accepted offers, the only offer received was going to be countered, and offered to show the complainant the house. The complainant was upset because two days earlier they were told that they had a deal pending completed paperwork.

The seller eventually proposed a counter offer and the complainant accepted; but when issues arose from the home inspection, the listing salesperson was very difficult to reach. A second salesperson from the complainant’s brokerage became involved in the transaction. Eventually, the deal fell on an amendment and the seller accepted another offer. The complainant then submitted a complaint alleging the listing salesperson acted unethically, unprofessionally and illegally.

When the complaint was investigated, the evidence did not support the complainant’s allegations of unethical and illegal conduct. There were extenuating circumstances in this case (the seller was in and out of the country and the hospital), and the evidence showed that the listing salesperson was in contact the complainant’s salesperson during the offer stage and did apprise them of the seller’s situation.

Much of the complaint stemmed from the complainant’s salesperson failing to understand and explain the offer process to their client. The registrar empathized with the complainant’s frustration with being told there was an agreement only to find out the seller was entertaining another offer; but there was no evidence the listing salesperson violated the Real Estate Trading Act or Bylaw because their client decided to accept another offer.

The salespeople did engage in other activities that violated the Bylaw, including verbal agreements, both to extend the expiry date on the agreement of purchase and sale and on the acceptance of the counter offer.

The listing salesperson misled the complainant’s salesperson twice about the existence of a back up offer and presented a counter offer after the irrevocable date expired.

The complainant’s salesperson, and the other salesperson at the brokerage who became involved with the deal shortly before it fell, both incorrectly advised the complainant on the offer process.

Results

The listing salesperson was charged with violating Bylaw 702, Article 2, for submitting a counter offer that was already expired, which was not in the best interests of their client; violating Bylaw 702, Article 11, for entering into verbal agreements; and violating Bylaw 702, Article 34, for stating there was a backup offer when there wasn’t, which is creating a false statement.

The complainant’s salesperson was charged with violating Bylaw 702, Article 11, for entering into verbal agreements and for not having their client date the acceptance on the counter offer.

Penalty

The salesperson was fined $400 for violating Bylaw 702, Article 2; $400 for violating Bylaw 702, Article 11; and $750 for violating Bylaw 702, Article 34. The complainant’s salesperson was fined $400 for violating Bylaw 702, Article 11. Both the complainant’s salesperson and the other salesperson from the brokerage were sent warning letters on the importance of correctly advising clients on the offer process.

Multiple Offers—Representing a Seller

If you are the seller’s industry member, inform the seller immediately.

Recommend the seller review every offer prior to making a decision, if circumstances allow.

If the seller indicated in the seller brokerage agreement to disclose the existence of multiple offers, tell the buyers’ industry members s as soon as possible.

Advise your seller of options, such as:

• Accept one offer, reject all others
• Counter one offer and set others aside pending the result
• Reject all offers

Back Up Offers

A back-up offer is not a competing offer; it is a second accepted offer that only comes into play if the first offer falls. Because a back-up offer is not a competing offer, the disclosure requirement does not apply. The only exception to this rule is transaction brokerage. To remain fair and impartial to all parties, a back-up offer must be disclosed to the first buyer.

Multiple Offers—Buyers

If the seller’s industry member discloses multiple offers, inform the buyer as soon as possible.

Tell the buyer what the seller’s options are in a multiple offer situation.

Tell the buyer their options, such as:

• Increase the offer
• Leave offer as it is
• Withdraw the offer
• Reconsider the fixtures, chattels, terms and conditions of the offer

Case Overview: Verbal Negotiations and Expired Contracts

The Commission received a complaint from buyers about the conduct of the listing salesperson of the property they attempted to purchase. The complainants alleged the listing salesperson acted in an unprofessional and unethical manner by leading them to believe their deal was firm when the sellers had accepted an offer from another party. They also alleged the listing salesperson led them to believe the sellers might entertain a lower sale price which resulted in delaying the finalization of the deal.

The Commission investigator reviewed the transaction paperwork. The complainants submitted an offer below the asking price and with a number of conditions. The sellers countered the offer, increasing the price and removing some of the conditions. The counter was left open until 11:00 a.m. Both salespeople engaged in verbal negotiations over the price and eventually the counter offer was signed and sent back, but after the deadline expired. The complainants believed they were the successful purchasers until it was time to set up the property inspection and they were told the house was sold to someone else with a full price offer and fewer conditions.

The investigation did not reveal unethical or unprofessional conduct; however both salespeople failed to act in the best interests of their clients by engaging in verbal negotiations and not amending agreements to extend deadlines.

The complainant’s broker attempted to contact the listing broker while the transaction was in play by phone and by email to address the situation, however, the listing broker was unreachable and the complainant’s broker was eventually put through to an unlicensed employee.

Results

The listing salesperson was charged with violating Bylaw 702, Article 11, for entering into verbal (unenforceable) agreements; and violating Bylaw 702, Article 2, for failing to address the expiry date in the counter offer and not obtaining an extension.

The complainants’ salesperson was charged with violating Bylaw 702, Article 11, for entering into verbal agreements; and violating Bylaw 702, Article 2, for submitting a counter offer that was already expired.

The listing broker violated Bylaw 703 (a), which requires a broker or managing associate broker to be available to supervise and be actively engaged in the management of the brokerage.

Penalty

Both salespeople were fined $400 for violating Bylaw 702, Article 11, and $400 for violating Bylaw 702, Article 2. The listing broker was fined $500 for violating Bylaw 703 (a).

Case Overview: Poor Paperwork, Failure to Provide Duty of Care

The Commission received a complaint from a seller about the salesperson who represented the buyer on the sale of their home. The sellers alleged the salesperson acted unprofessionally by trying to have them pay half the costs for a new drilled well ten days before the scheduled closing. By leaving such a request to the last minute, sellers allege the salesperson put them in a position where they felt undue stress and pressure to comply, despite having met the conditions of the agreement.

The evidence shows that the sellers agreed to an amendment that gave the buyers until two weeks of closing to get a “0” bacteria test, failing which they would install a “system” that would yield a “0” bacteria count test result. If the bacteria test was positive, the seller would have to deal with rectifying the issue near to the closing date. The final water test was negative and no further action ought to have been necessary. The buyers’ decision to ask for half the cost of a drilled well was not, as per the evidence, the salesperson’s decision. The salesperson did advise the seller’s salesperson days before the final water test that if the test failed, the buyer would be seeking compensation for a new drilled well, but the actual request came from the buyer’s lawyer.

The evidence in this case did support that the buyer’s salesperson did not protect and promote the best interests of their clients. The salesperson told the Commission that well-water quality and quantity were important to the buyers, but the paperwork did not reflect this concern. The agreement of purchase and sale the salesperson prepared had duplicate (and ambiguous) water-test clauses; the salesperson had amendments prepared that were signed incorrectly and communicated late; the second amendment was so ambiguous that the salesperson’s own team was not clear on what “system” the amendment was referring to. Finally, the salesperson was unsure what happened with the drilled well request, because they were not involved in the trade after the final water test, other than to do the pre-closing walkthrough on the scheduled closing date. The salesperson was also not aware that the closing date had been extended by three days.

The Commission also found that neither salesperson involved in the transaction prepared an amendment to extend the closing date. Also, the water test amendments were ambiguous, and the timing unclear. A licensed assistant had prepared two of the amendments.

The evidence in this case also showed that the seller’s salesperson did not communicate to her clients that the buyers might want a drilled well when notified of this before the final water test. The evidence also indicated the salesperson presented a verbal offer during the negotiations.

Results

The buyer’s salesperson violated Bylaw 702, Article 2, for not protecting and promoting the best interests of their client by not properly addressing their concerns with well water quality; and violated Bylaw 702, Article 11, for poor paperwork.

The buyer’s salesperson’s licensed assistant terminated their licence before the conclusion of the investigation. Prior to obtaining a real estate licence in the future, they will be required to respond to the Commission’s allegation of writing ambiguous clauses.

The seller’s salesperson also terminated their licence prior to the conclusion of the investigation. Prior to obtaining a real estate license in the future, the salesperson will be required to respond to the Commission’s allegations of preparing poor paperwork and presenting a verbal offer.

Penalty

The salesperson was fined $750 for violating Bylaw 702, Article 2, and $500 for violating Bylaw 702, Article 11.

Case Overview: Misleading Advertising

The Commission initiated an investigation into a salesperson who had for-sale sign on a property that showed an unlicensed person advertising as a team with the salesperson. The team name was the name of the unlicensed person. When the Commission investigated, they found the sign had been up for over a month. The investigator also noted that the salesperson’s website displayed a photo of the same unlicensed person identified as a “Professional Real Estate Consultant”. Given the two instances, and a previous history of advertising non-compliance, the Registrar opened an investigation into the salesperson’s advertising practices.

The evidence supported that on two occasions, the salesperson advertised in a manner that implied that an unlicensed person was licensed to trade in real estate. The salesperson was also advertising as a real estate team, despite being the only person licensed to trade in real estate. In addition to those instances, one month after the salesperson was asked to respond to the investigation, an ad appeared in a print publication advertising the real estate services of the salesperson and the unlicensed person.

Broker review of advertising was an ongoing issue with this brokerage. The broker had been copied on a number of letters respecting advertising infractions, twice regarding advertising of the unlicensed person in this complaint, and was fined in 2010 for failing to review advertising.

Results

The salesperson was charged with violating Bylaw 708 for misleading advertising.

The broker was charged with violating Bylaw 704 (b) for not reviewing advertising.

Penalty

The salesperson was fined $500 for violating Bylaw 708.

The broker was fined $2,000 for violating Bylaw 704 (b). The broker was also ordered to provide the Commission with a written description of what measures and protocols they will implement at the brokerage to rectify recurring advertising issues at the brokerage.

Duty of Care

Real estate brokerages owe a duty of care to clients as well as a limited duty of care to customers. Industry members must conduct themselves in accordance with a standard of care expected of knowledgeable practitioners. Failure to do so exposes brokerages and industry members to liability for professional negligence as well as the Commission discipline process.

The standard of care is based on how ordinary and prudent members of the industry would conduct themselves under similar circumstances. The standard expected is not of perfection, but of reasonableness according to how knowledgeable, well-trained practitioners would act.

It is expected that all industry members have an understanding of agency and the duties it imposes, including the duty to protect the best interests of the client and the duty to respond in a timely manner.

Duplicate Clauses

The mandatory agreement of purchase and sale contains a well and septic clause, which, when effected, triggers the use of the mandatory well and septic form. If you are in a situation where you have to deal with a duplicate clause, the duplicate clause cannot contradict the clauses in the Commission mandatory forms.

Licensed Assistants and the Real Estate Trading Act

Throughout the course of several investigations, the Commission investigators have noted a misconception within the industry about the obligations of licensed assistants under the Real Estate Trading Act. Specifically, that their obligations are lessened by being an assistant (employee of another industry member). This is not true. All licensed individuals, whether employees or independent contractors, are regarded the same under the Real Estate Trading Act.

What Duties Can’t Unlicensed Assistants Permitted Perform?

Unlicensed employees cannot perform the following duties:

• host public open houses
• carry out pre-closing viewings
• present and sign any documents dealing with a real estate transaction
• solicit a contract to trade in real estate
• make cold calls by telephone or in person to potential clients
• negotiate any terms of a real estate transaction
• discuss or explain listings, offers, contracts, or other similar matters with anyone outside the employ of the brokerage
• advertise directly or indirectly in real estate
• respond to advertising inquiries from the public

Case Overview: Unprofessional Conduct as a Principal

The Commission received a complaint from a buyer about the listing salesperson, who was also the seller, for misrepresenting the property they purchased. The complainant alleged that the salesperson lied on the listing cut about a septic tank, which turned out to be a holding tank, and hid access to a section of the basement from an inspector to conceal a pipe releasing grey water into the lake on which the property fronted. The complainants also allege the salesperson lied to an environmental official about having fixed a problem with grey water discharging into the lake. They also allege the salesperson lied on the MLS® cut sheet, stating the house had “new” items, that were, in fact, not new.

When the complaint was investigated, the compliance investigator discovered the salesperson advertised the property as “fully renovated” with “new bathrooms, new kitchen”, “new roof, electrical, windows, siding, etc.” When questioned about the renovations, the salesperson stated their understanding of “new” was that if renovations were within one year then it was okay to advertise them as “new”. This is not true. Additionally, the salesperson refused to provide receipts for any of the renovations described as “new”, nor provide a name of any subcontractors. In short, the salesperson did not provide any evidence to corroborate his claims that items in the house were “new”. It was the Registrar’s opinion that the salesperson’s advertising intentionally mislead buyers about the property, and failed to provide any proof to the Commission when asked to verify that the items cited as new were in fact new.

Regarding the other allegations, the evidence supported that the property did not have a septic system, but did not conclusively support that the salesperson knew this. The question is whether the salesperson intentionally mislead the buyers, or if the salesperson’s actions were the result of ignorance. After reviewing the witness statements and the evidence and the fact that the salesperson owned the property for nine years, the Registrar deemed that, on a balance of probabilities, the salesperson ought to have known the septic system was a holding tank. There is no evidence a septic field existed from any source, including the salesperson.

Of greater concern was the four-inch pipe discharging grey water into the lake. Based on the evidence, the salesperson knew about the pipe and did not disclose this fact to the buyers. The salesperson also attempted to mislead the Commission about the pipe. In 2010, an environmental inspector visited the property to inspect allegations of grey water discharging into the lake. At the time, the salesperson denied access to the inside of the house. The inspector instructed the salesperson to cap off the pipe and cover it at the lake entrance. The salesperson told the inspector that they had done as instructed, however, in 2011, when the inspector re-visited the property, they noted grey water discharging from the pipe directly into the lake. The professional engineer that designed the new septic system for the buyer corroborated this. Throughout the investigation, the salesperson maintained that the pipe was a foundation/weeping tile discharge. The salesperson told the Commission that the grey water went into a “separate system”, however the salesperson’s description of the “system” that the grey water discharged into was vague and not supported by any independent evidence.

The Registrar stated that in his view, the salesperson’s credibility was low. The salesperson’s statements were riddled with inconsistencies, defamatory comments against his neighbour and his colleagues, uncorroborated “facts” and vague explanations, and on repeated occasions, the salesperson attempted to mislead the Commission investigation.

Results

The salesperson was charged with violating Real Estate Trading Act, Section 22(1) (a) and (b) for unprofessional conduct, and Section 38 (3) (b) for failing to disclose a material latent defect on the sale of their own property; and violating Bylaw 816 for providing false information during a Commission investigation.

Penalty

The salesperson is subject to a six-month licence suspension and was fined $2,000 for Real Estate Trading Act violations and $750 for violating Bylaw 816.

New Means New

New is an absolute term and should not be used unless the facts support its use. In this case, the salesperson stated they believed it was okay to advertise items as new if they were less than a year old. This is not true. If the items were renovated or replaced in the last year, the ad should have said they were renovated or replaced in the last year. However, in this case, the claims were false. Had the extensive renovations been conducted, there would have been receipts and trades people testimony to support the claims.

Material Latent Defect

A material latent defect is a fault in the property that would not be discovered by a reasonably thorough building inspection (for example, a serious crack in the foundation that has been covered over with paneling or, in this case, a concealed grey water pipe draining directly into a lake).

Bylaw 702, Article 10, states “The industry member has an obligation to discover facts pertaining to every property for which the industry member accepts an agency which a reasonably prudent industry member would discover in order to fulfil the obligation to avoid error, misrepresentation, or concealment of pertinent facts. The industry member shall disclose, in writing whenever possible, any known material latent defects to their clients or other industry members involved in a transaction.”

Case Overview: Failure to Understand and Explain Agency

NSAR received a member-to-member complaint against a salesperson. After their investigation concluded, the matter was referred to the Commission at the request of the buyer involved in the transaction. The buyers alleged that the salesperson, acting in transaction brokerage, provided them with false information, disclosed confidential information to the seller, and alleged they made decisions based on the salesperson’s advice, not understanding their rights.

When the case was investigated, the evidence supported the allegations that the listing salesperson did not disclose their role in the transaction and get written acknowledgement before a relationship developed. The salesperson told the buyers that the house was listed by another salesperson at the brokerage, but under designated agency, the buyers could have independent representation through them. When the buyer did not see “designated agency” on the form, the salesperson wrote “according to designated agency” in the agency section of the agreement of purchase and sale. The salesperson worked for a common law brokerage.

The evidence did not support that the salesperson disclosed confidential information to the seller, as suggested by the buyer. However, the salesperson did not tell the seller (brokerage client) information the salesperson was legally obligated to tell their client.

The salesperson violated Bylaw 721(b), which requires the brokerage to provide the buyer and seller with the opportunity to review the transaction brokerage agreement and request more information before signing the agreement. The transaction brokerage agreement was completed a day after the offer was presented, countered, and accepted.

The salesperson provided advice to the buyers in transaction brokerage, which is a violation of Bylaw 721(d).

The transaction paperwork also contained a number of errors. Agency was completed incorrectly in the APS and one of the buyers did not sign the agency brochure. The salesperson had one of the buyers sign a blank APS because the buyer was going out of town, and the salesperson used an outdated copy of the APS, which violates Bylaw 702, Article 10, and Bylaw 712.

The evidence supports that neither salesperson understood their roles under transaction brokerage, which is a violation of Bylaw 702, Article 6.

The listing salesperson terminated their licence while the investigation was ongoing.

Results

The buyers salesperson violated

• Bylaw 702, Article 3, for failing to disclose the nature of services and their role;
• Bylaw 702 Article 6, for failing to provide skilled and conscientious service;
• Bylaw 702 Article 11, for poor paperwork;
• Bylaw 702 Article 39 (a) (xi), for failing to convey relevant information to the seller;
• Bylaw 721 (b), for failing to give the buyers and seller the opportunity to review the transaction brokerage agreement before entering into an agreement of purchase and sale.
• Bylaw 721(d) for failing to treat both parties in an impartial manner.

Penalty

The salesperson was fined $400 for each violation ($2,400) and was ordered to complete a course requirement.

Transaction Brokerage

Transaction brokerage occurs when a brokerage has agency relationships with a seller and a buyer and the buyer purchases the seller’s property. In transaction brokerage, the brokerage and its industry members must treat both parties to the transaction in an even-handed, objective and impartial manner. Industry members cannot use discretion or judgment that benefits one client to the prejudice of the other client.

Your duties to both parties are:

• disclose conflict of interest, and obtain informed consent and agreement to transaction brokerage in writing
• assist the buyer and seller in preparing a mutually acceptable agreement
• provide any advice or information given to one party to the other party
• provide information and advice to assist the parties in addressing issues of mutual interest to both parties
• keep confidential the motivation of the buyer or seller
• keep confidential the price a seller may be prepared to accept or a buyer is maybe willing to pay
• disclose material latent defects concerning the property or the financial ability of the buyer to complete the transaction
• prepare all necessary documents in accordance with the instructions of the buyer or the seller
• exercise reasonable care and skill in the provision of services

Case Overview: Unprofessional Conduct

The Commission received a complaint from buyers who alleged the salesperson that listed the property they attempted to purchase acted unprofessionally when they decided to use another brokerage to represent them in the transaction. The complainants said the listing salesperson was verbally abusive in dealing with their buyer’s representative and breached confidentiality by calling the complainant’s workplace and speaking to one of the complainant’s colleagues.

When the complaint and the transaction were investigated, the registrar found that the evidence supported that the listing salesperson’s conduct was unprofessional overall, particularly in dealing with the complainant’s industry member.

Additional issues with the transaction came to light during the investigation.

The property was co-listed with another brokerage with a different agency model and two seller brokerage agreements were required, but only one was completed. To co-list a property between a designated agency brokerage and a common law brokerage, two brokerage agreements are required. There was an amendment to the seller brokerage agreement regarding co-listing, however, it did not specify the logistics of the arrangement between brokerages, such as the remuneration, responsibility for holding trust funds, inputting data, etc.

The salesperson at the co-listing brokerage emailed the buyers stating “I think we may have some negotiability on the price now!” The salesperson was working for the sellers and had a fiduciary obligation to act in the best interests of the seller, not negotiate a lower price for the buyers.

Results

The listing salesperson was charged with violating Bylaw 702, Article 35, for unprofessional conduct. The co-listing salesperson was charged with violating Bylaw 702, Article 2, for failing to protect and promote the best interests of their seller client.

Penalty

Both salespeople were fined $400.

Agency Obligations to a Client

Undivided loyalty: you must act solely in the client’s best interests, placing their interests above your own interests and above the interests of other parties. This means avoiding conflicts of interest and protecting the client’s negotiating position at all times.

Confidentiality: you have a duty to keep the client’s confidences. Confidential information includes any information about the client, the property, or the transaction that is not required by law to be disclosed.

Full disclosure: you must inform the client of all facts of which you know that might affect the relationship with the client or influence the client’s decision in the transaction. This includes any conflicts of interest you might have. You are not to decide if information is important to the client, rather, you are obligated to disclose all relevant information to the client and they can make their own decisions.

Obedience: You must obey all of the client’s lawful instructions. If the client insists you do something unlawful, you are obliged to refuse and consider terminating the relationship.
Reasonable care and skill: You must exercise reasonable care and skill in performing all assigned duties. You are expected to meet the standard of care of a reasonable and competent industry member. However, if you claim expertise in any area of practice, you will be held to a higher standard.

Full accounting: You must account for all money and property placed in your hands while acting on the client’s behalf.

Case Overview: Failing to Provide Brokerage with Documents

The Commission received a written complaint from a seller who alleged a salesperson made disparaging remarks concerning the seller’s choice to market the property through a mere posting. When the complaint was investigated, there was insufficient evidence to prove the seller’s allegations. When the transaction paperwork was reviewed, the Commission found the following issues:

The salesperson had the seller sign a fee agreement; however the salesperson did not maintain a copy of the fee agreement to provide to the brokerage.

The salesperson had the buyer sign a buyer designated brokerage agreement that indicated “0%” commission in clause 8.2 and did not address clause 8.3 (b) (ii), but the brokerage collected a cooperating commission on another sale. Clause 8.3 (b) (ii) of this form specifies that any amount received by the brokerage that is more than the remuneration specified in 8.2 will be paid to the buyer. This issue was addressed in the brokerage’s 2012 and 2013 audit reports.

Results

The salesperson was charged with violating Bylaw 705 (c) for not providing the brokerage with a copy of the fee agreement.

Penalty

The salesperson was fined $400 for violating Bylaw 705 (c).

Remuneration Clause in Buyer Brokerage Agreements

In this case, the salesperson recorded 0% for brokerage remuneration in clause 8.2 in the buyer designated brokerage agreement, meaning the buyer was not liable for any commission payable to the brokerage. This is clause 4.2 in the common law buyer brokerage agreement.

In clause 8.3 (a) (i) and (ii) the salesperson checked “yes”, authorizing the brokerage to request payment from the seller’s brokerage or, if the property is not listed, from the seller. This is clause 4.3 in the common-law buyer brokerage agreement.

Clause 8.3 parts (b) (i) and (ii) were left intact. Clause (i) requires the buyer to pay any shortfall between the remuneration specified in clause 8.2 and the remuneration collected from the seller’s brokerage/seller in Clause 8.3 (a). Clause 8.2 specified 0% remuneration, so the buyer owes nothing under (b) (i). Clause (ii) states that any remuneration in excess of what is specified in 8.2 will be paid to the buyer. Since 8.2 was 0% remuneration, any remuneration paid by the seller’s brokerage/seller would then be excess funds and paid to the buyer.

When completing buyer brokerage agreements and the buyer does not want to pay remuneration to the brokerage, Clause 8.3 parts (b) (i) and (ii) must be struck or modified. If not, contractually, remuneration paid to the buyer’s brokerage goes to the buyer and the brokerage is left with nothing.

Case Overview: Poor Paperwork

The Commission received a complaint from a seller who alleged the listing salesperson refused to show the seller’s property on two separate occasions and also alleged that the salesperson cut two open houses short.

When the Commission investigated the complaint, the seller’s allegations could not be substantiated, however, a review of the transaction file revealed a number of issues.

The seller designated brokerage agreement was not signed by the salesperson as the brokerage representative. The brokerage representative needs to sign on behalf of the brokerage for the brokerage to have a claim for commission.

The listing date was June 25, 2008 and the expiry date was September 18, 2008. The year should have been 2012, not 2008.

The listing addendum not signed by the seller.

Results

The salesperson violated Bylaw 702, Article 11, for poor paperwork.

Penalty

The salesperson was fined $400.

Case Overview: Advertising Without Authority

The commission received a complaint about a video posted to YouTube by a salesperson that gave a virtual tour of a property. The property was listed by an unrelated brokerage. When the Commission investigated, it was determined that the salesperson did not have written permission to record the videos or post them online.

Results

The salesperson violated Bylaw 709 for advertising a property without the written permission of the seller/ sellers lawful designate.

Penalty

The salesperson was fined $400 for violating Bylaw 709.

Get it in Writing

Bylaw 702, Article 15, states “The industry member shall not advertise a property without the seller’s/ landlord’s written authority, nor shall the advertised or offered price of a property be other than that which was agreed upon with the seller/ landlord.”

In this case, a video of a property was posted to YouTube without the written consent of the seller, by a salesperson who worked at a different brokerage.

There is no grey area when it comes to advertising properties without written consent. If it happens and a complaint is filed, the advertisement is clear and undeniable evidence of a failure to comply with the Bylaw

Case Overview: Poor Paperwork, Extending Expired Agreements

The Commission received a complaint from a potential buyer. The buyer alleged the listing broker acted unprofessionally by being unavailable to show a property and then refusing to allow the buyer to submit an offer on the property, favouring an offer received from a buyer client of the listing brokerage.

The evidence did not support the allegations. While the listing broker was unavailable to show the property, another industry member at the brokerage offered to set up a viewing at a later time, to accommodate notice to the tenant.

The evidence showed that the seller did not want to entertain any offers after they had confirmed a sale with the successful buyer. The broker was following the instructions of their client.

During the investigation, the following issues were identified with the transaction paperwork:

• There were several changes to the APS (as requested by the buyer in emails), to the seller brokerage agreement (term expiry) and to amendments to the seller brokerage agreement that were not properly documented.
• According to the Filogix history, the listing was “reactivated” several times based on amendments that were dated after the listing expired. The amendment also had an ambiguous handwritten note that the listing industry member said “reactivated” the listing for six months with a new expiry, and reduced the price to $125,900
• The amendment to the APS accepted one day after it had expired and the seller did not select a response.
• The broker did not provide the Commission with a copy of the PCDS and confirmed the brokerage did not have a copy in the brokerage file. The broker did not provide the Commission with agency brochures for the buyer and the seller.
• Agency was completed incorrectly in the APS.

Results

The broker was charged with violating Bylaw 702, Article 11, for not obtaining initials on changes to the APS and extending the listing contract after it expired; violating Bylaw 621 for not retaining copies of the PCDS and agency brochures; violating Bylaw 702, Article 3, for not disclosing and seeking written acknowledgement from the buyer of the broker’s role and the nature of services provided.

Penalty

The broker was charged $500 for violating Bylaw 702, Article 3 and $500 for violating Bylaw 621 ($1,000), and ordered to complete a course requirement for violating Bylaw 702 article 11.

Case Overview: Poor Paperwork, Poor Handling of Transaction Brokerage

The Commission received a complaint from buyers about the conduct of the salesperson who listed the property they purchased. The buyers allege the salesperson acted unprofessionally by entering into a transaction brokerage agreement with them and the seller, a long-time builder client of the brokerage.

The buyers also allege the salesperson did not properly amend the APS to accommodate necessary extensions to the water-test condition and the closing date. The buyers said the salesperson conducted a water test on their behalf without waiting for the appropriate period of time to lapse after the well was shocked. They believe they were misrepresented, which caused them to incur the cost of digging a new well on their property, because the well drilled by the builder allegedly produced toxic water that made the family sick.

When the complaint was investigated, the evidence showed the listing industry member did not properly amend the APS to extend date of the water test or the closing date.

The APS stated referenced schedules “c” and “d”, but there were two schedules named “c” in the file. The property migration clauses were not ticked, though both were initialed by all parties; one of the buyer’s name was removed from the APS with white-out; and the amendment to APS did not have an acceptance deadline, nor was page two used to indicate the seller’s response.

However, the evidence supported that the salesperson did not fulfill their duties to protect and promote the best interests of the client (the buyer). When the buyers decided to purchase one of the salesperson’s listings, the salesperson should have advised them of their option to seek independent representation.

The evidence also supported that the salesperson did not fulfill their duties under transaction brokerage, as per Bylaw 721(d)(i)(ii)(iv). The salesperson did not treat the interests of both the buyer and the seller in an even-handed, objective and impartial manner, nor did the salesperson exercise reasonable care and skill. The salesperson should not have conducted a water test on behalf of the buyers. The buyer could have done the test themselves, or have an independent third party do the test.

Upon review of the brokerage’s audit history, the matter of inappropriate transaction brokerage has been raised before. The evidence supports the broker did not take adequate steps to deal with this concern. This is a violation of Bylaw 704 (c).

Results

The salesperson was charged with violating Bylaw 702, Article 2, for not protecting and promoting the best interests of the buyer client; violating Bylaw 721(d)(i)(ii)(iv) for not fulfilling their duties under transaction brokerage; and violating Bylaw 702, Article 11, for poor paperwork.

The broker was charged with violating Bylaw 704 (c) for failing to adequately supervise the industry members at the brokerage.

Penalty

The salesperson was fined $500 for violating Bylaw 702, Article 2; $750 for violating Bylaw 721 (d), (i), (ii), (iv) and $500 for violating Bylaw 702, Article 11.

The broker was fined $750 for violating Bylaw 704 (c).

Completing the Agency Relationships Section

The improperly completed agency section in this case is a problem that is routinely identified during transaction-file audits. The agency section is made up of three parts, (a), (b), and (c). It is extremely important to note that section (c) is for transaction brokerage only, where both the seller and the buyer are clients of the same brokerage under common law or clients of the same Industry Member or team under designated agency. All other relationships are documented in sections (a) and (b) only.

White-Out is Never Acceptable on an Agreement

In this investigation, and in audits, the Commission staff occasionally encounter real estate documents on which white-out has been used to make changes or corrections.

Do not use white out on real estate documents. If a change needs to be made, strike the text that needs to be modified, write the corrections next to the text that was struck, and have all parties to the agreement initial the change.

Brokerage Audits—Strike Three, Four, and Five

Every year, the Commission compliance auditors conduct yearly trust audits on each brokerage in Nova Scotia. In addition to the trust audits, each brokerage is subject to a brokerage audit every three years. At the end of an audit, the compliance auditors offer to meet with the broker to discuss any problem areas identified and address any questions the broker may have. Broker participation in an audit meeting is optional; however, the Commission strongly recommends brokers attend. This is a broker’s opportunity to address problem areas, ask questions, and discuss ways they can improve their audit results in the future. The compliance auditors follow up with a formal audit report, which reiterates their findings during the audit. Audits results fall in one of three categories: very good, good, and needs improvement. Any brokerage that receives three consecutive needs-improvement audits is subject to disciplinary action. The fine for three consecutive-needs improvement audits is $500 and the fine increases if the brokerage receives a fourth consecutive needs-improvement audit.

Three Consecutive Needs-Improvement Audits

Four brokers were fined $500 for three consecutive needs-improvement audits.

Three of the brokers were required to take the trust accounting portion of the broker licensing course.

Four Consecutive Needs-Improvement Audits

Two brokers were fined $1,000 and required to take the trust accounting portion of the broker licensing course.

Five Consecutive Needs-Improvement Audits

One broker was downgraded to a salesperson licence and is required to take the broker licensing course and pass the licensing exam, should they wish to become broker again.

Needs improvement

The following issues are commonly identified in needs improvement audit findings:

• Poor paperwork
• Vague clauses
• Inappropriate cash backs
• Missing paperwork (Bylaw 621 lists the requirements)
• No terminations for fallen deals
• Trust funds released without written authority
• Transaction brokerage where inappropriate
• Failure to disclose licensed status and intent

Discipline Newsletter

IMPORTANT NOTICE: Audit and record keeping policies, and Part 6 of the Commission By-law have been updated as of January 2025. This newsletter references outdated content, in accordance with the versions in effect at time. For current information, click HERE.

June 2013

Volume 5 Issue 1

About the Commission’s Discipline Process

The Nova Scotia Real Estate Commission is responsible for the administration of the Real Estate Trading Act and the Commission Bylaw. Part of that responsibility is dealing with public complaints about a brokerage or an industry member.

Complaints are investigated by the Commission’s compliance staff. The compliance staff prepares an investigation report for each case, which is then reviewed by the Registrar. The Registrar determines whether there was a breach of the Act or Bylaw and in cases where there was a breach, lays charges and penalties. The cases are then presented to the Complaint Review Committee who may reject or approve the Registrar’s decision.

After the committee reviews the cases and makes any adjustments to the proposed charges, the industry member is sent a statement of allegations and a settlement agreement. If the industry member accepts a settlement agreement, the industry member must satisfy the penalty imposed.

If the industry member does not agree with a settlement agreement then the matter is referred to a full discipline hearing. After the Commission’s and witnesses’ evidence has been examined and cross examined at a hearing, the Hearing Panel decides whether the industry member is guilty of any of the charges brought forward at the hearing. The charges may include those proposed in the settlement agreement, but are not necessarily limited to those charges. If they are found guilty of any of the charges there is then an opportunity for both the Commission and the industry member to speak to appropriate penalties.

An industry member has the right to appeal the decision of the Hearing Panel to the Nova Scotia Court of Appeal, should they wish to and if there are grounds to do so.

Inside This Issue

About the Commission’s discipline process
Trading without a licence
Interference with a competitor’s client
Not acting in best interest and poor paperwork
Unprofessional conduct
Inappropriate transaction brokerage, failures to disclose, failure to inform
Inappropriate transaction brokerage (continued); Advertising without authority
Poor paperwork and advertising the wrong price
Brokerage audits— strike three

Publication Policy

As per the Commission’s discipline publication threshold, industry members who receive a fine in excess of $500 (one fine over $500, not one or more fines under $500, which may total more than $500) have their names published in the newsletter that is sent out to all industry members. The names are also published in the newsletter that appears on the Commission website for a period of 30 days.

Case Overview: Trading Without A Licence

When an industry member fails to complete their continuing education requirements by June 30th, their licence is not renewed July 1st and they must immediately cease all trading activities. This includes taking down for-sale signs, individual websites and removing unlicensed industry members from brokerage websites.

The following industry members did not complete their education requirements by June 30th, 2012 and continued to trade in real estate, which is a violation of Real Estate Trading Act, Section 4.

Four salespeople were charged with violating Act Section 4 and fined $750.

Five brokers were charged with violating Bylaw 704 (f) by having an unlicensed person appear as licensed to trade in real estate on their websites. The brokers were each fined $750.

Mandatory Continuing Education

Industry members may not realize it, but when they don’t complete their continuing professional education (CPE) credits, they incur severe disciplinary action, i.e. a licence suspension. Licence suspensions can be extremely costly.

You must immediately cease trading in real estate. This means your listings are assigned to another industry member at your brokerage, as are any buyers you have under contract, and you cannot solicit new clients. You must take down all your advertising and cease all trading activities.

Your E&O coverage also ceases until your licence is renewed.

Brokers and their industry members are responsible for ensuring continuing education requirements are completed by June 30th and that any industry member who does not have their courses completed, ceases trading on July 1st, including taking down for-sale signs and websites.

Case Overview: Interference with a Competitor's Client 

The Commission received a complaint from sellers who were unhappy with the conduct of the salesperson who represented the buyers on the sale of their house. The sellers alleged the salesperson was abrasive and rude and negotiated inclusions directly with the one of the sellers after showing up early for a showing.

When the complaint was investigated, there was insufficient evidence to prove the salesperson was ill mannered; however, there was evidence to prove the salesperson negotiated directly with one of the sellers.

Results

The salesperson was charged with violating Bylaw 702, Article 28, for failing to respect the contractual relationship of a competitor.

Penalty

The salesperson was fined $500.

Bylaw 702, Article 28

“The agency or other contractual relationship of a competitor shall be respected by all industry members. Negotiations concerning exclusively listed property or with any party who is exclusively represented shall be carried on with the client’s agent and not with the client directly, except with the consent of the client’s agent. Prospecting tenants is not a breach of this article.”

When a consumer has a client relationship with an industry member, that relationship must be respected by other industry members. All negotiations must take place between the respective industry members, not the clients, unless the clients give written instruction otherwise.

Abusive/Rude Behaviour

When the Commission receives complaints about an industry member displaying rude and or abusive behaviour, it can be difficult to prove. Circumstances change, however, when an industry member receives repeated complaints alleging the same bad behaviour, because it demonstrates a pattern of behaviour, not an isolated incident.

Case Overview: Not Acting in Best Interest and Poor Paperwork

The Commission received a complaint from sellers about the conduct of the salesperson who listed their house. The sellers alleged the salesperson did not explain the seller brokerage agreement, did not provide them with a true copy of the agreement, accessed the house without permission, and gave the buyers access to the house without their permission. The sellers also alleged a number of service issues; however service issues are outside the Commission’s jurisdiction.

When the compliance officer investigated the case, they found issues with the paperwork, including witnessing faxed signatures, missing initials, and failing to document a verbally agreed upon out-clause in the brokerage agreement. The salesperson also entered the property without the sellers’ permission to perform a second water test on behalf of the buyers and permitted the buyers to enter the property without the sellers’ permission.

Results

The salesperson was charge with two violations of Bylaw 702, Article 11, for poor paperwork; and for failing to provide a true copy of the brokerage agreement; and Bylaw 702, Article 2, for failing to protect the interests of the client.

Penalty

The salesperson was fined $400 for each violation ($1200 total).

About Settlement Agreements

The first option for most industry members facing disciplinary action is a settlement agreement. In the majority of cases, the Registrar writes a proposed settlement agreement, which accompanies a statement of allegations (charge letter), that outlines the alleged violations and corresponding penalty. The settlement agreement, along with the investigation file, is presented to the Complaint Review Committee. The committee may approve or reject the settlement agreement.

If the committee accepts the settlement agreement, the industry member can accept the agreement and satisfy the penalty or reject it and go to hearing. If the Complaint Review Committee rejects the settlement agreement, it may recommend that the matter be dealt with through a hearing.

Consent to Enter a Property

Any time an industry member enters a property, they must have the property owner’s consent to do so.

While it may be tempting, especially when a property is vacant like the one in this case, to save time and enter the property without getting the seller’s consent, it is prohibited.

Entering a property without permission is also trespassing, which is a summary offence under the Protection of Property Act.

Case Overview: Unprofessional Conduct

The Commission received a complaint from sellers about a salesperson who showed their vacant home. The sellers alleged the salesperson unplugged a sump pump in the basement while showing their home and that evening there was a rainstorm and the basement flooded. The property had to be taken off the market for four months while the damage to the basement was repaired. The sellers were upset that they were not informed that the sump pump was disconnected in a timely manner.

When the Commission investigated, the compliance investigator found the salesperson did unplug the sump pump. The industry member called the listing salesperson to say the sump pump was unplugged, but the salesperson member only listened to half of the message that day. It wasn’t until the next day that the listing salesperson listened to the full message, by which time the basement was flooded.

Results

The salesperson that unplugged the sump pump was charged with violating Bylaw 702, Article 35, for unprofessional conduct. The listing salesperson charged with violating By-law 702, Article 2, for not protecting the best interests of their client.

Penalty

Both industry members were fined $400.

Duty of Care

Real estate brokerages owe a duty of care to clients as well as a limited duty of care to customers.

Industry Members must conduct themselves in accordance with a standard of care expected of knowledgeable practitioners. Failure to do so exposes brokerages and Industry members to liability for professional negligence as well as the Commission discipline process.

The standard of care is based on how ordinary and prudent members of the industry would conduct themselves under similar circumstances.

The standard expected is not of perfection, but of reasonableness according to how knowledgeable, well-trained practitioners would act.

It is expected that all industry members have an understanding of agency and the duties it imposes, including the duty to account for property and the duty to respond in a timely manner.

Case Overview: Inappropriate Transaction Brokerage, Failures to Disclose, Failure to Inform

The Commission received a complaint from buyers about the conduct of a salesperson whose house they attempted to purchase. The buyers were working with a salesperson at the same brokerage as the listing salesperson/ seller and entered into transaction brokerage. The buyers scheduled an inspection, but the inspection could not be completed because the water was turned off and the oil tank was empty. This was despite the fact that the salesperson/seller knew they were doing an inspection. The buyer decided to terminate the offer and submit a new (second) offer verbally through their salesperson. The salesperson/seller verbally accepted. A few days after the verbal acceptance, the buyers’ industry member wrote a new offer and had the buyers sign it. When the buyer’s salesperson presented the signed offer, the salesperson/seller stated that the offer would be a backup offer only as another offer was already accepted. The salesperson/ seller counter offered the buyers’ second offer, which was rejected. Several days later, the salesperson/seller withdrew the house from the market and sold it privately. The buyers believe the salesperson/seller’s conduct was unethical, unprofessional and offensive.

When the Commission investigated the complaint, the compliance investigator found that the brokerage entered into a transaction brokerage relationship with the complainants despite the fact that one of the salespeople was the seller and they both worked for the same common-law brokerage. As a result, neither salesperson could fulfill their duties required under the Bylaw. Both salespeople effected verbal agreements. The salesperson/seller failed to disclose their licence status, a multiple offer situation, and an agency relationship with the successful buyer. The salesperson/seller also failed to keep the broker up to date.

Results

The seller/salesperson was charged with violating By-law 702, Article 2, for entering into transaction brokerage when unable to fulfill their duties; violating Bylaw 702, Article 3, for failing to disclose their relationship with the successful buyers; Bylaw 702, Article 11, for verbal agreements; By-law 702, Article 12, for not disclosing a multiple offer; Bylaw 702, Article 21, for not disclosing licensed status; and Bylaw 705(d) for not keeping the broker up to date.

The other salesperson was charged with violating By-law 702, Article 2, for entering into transaction brokerage when unable to fulfill their duties; and Bylaw 702, Article 11, for verbal agreements.
The broker was charged with violating Bylaw 704 (a) and (b) for lack of broker supervision and not reviewing documentation.

Penalty

The listing salesperson (and seller) was fined:

• $750 for violating Bylaw 702, Article 2
• $500 for violating Bylaw 702, Article 3
• $500 for violating Bylaw 702, Article 11
• $500 for violating Bylaw 702, Article 12
• $400 for violating Bylaw 702, Article 21
• $500 for violating Bylaw 705 (d)

The other salesperson was fined $400 for each violation.

The broker was fined $750.

Case Overview: Advertising Without Authority

The Commission received a complaint from a buyer who saw a for sale sign on a property they wished to view. When their salesperson contacted the listing brokerage, they were told the property was not listed.

When the compliance investigator contacted the listing brokerage, they were told that the property did have a for-sale sign, but it was not yet listed.

Results

The broker was fined $1000.

Penalty

The broker was charged with violating Bylaw 702, Article 15, for advertising a property without written permission.

Interest Must be Disclosed

Bylaw 702, Article 21 states “The industry member shall not present an offer or acquire an interest in property either directly or indirectly for themselves, any member of their immediate family or any entity in which the industry member has a financial interest, without making the industry member’s status as a licensed person and their intent for the purchase known to the seller in writing...”

A failure to comply with Bylaw 703, Article 21 is easily proven: either the disclosure is made in writing, which can be produced, or the disclosure was not made.

Keep Your Broker Informed

Industry members trade on behalf of the brokerage with which they are licensed. As such, it is necessary to keep the broker apprised of all trading activity. In this case, the salesperson cancelled the listing and engaged in a private trade without the broker’s knowledge or permission.

Inappropriate Transaction Brokerage

Transaction brokerage the act of being a facilitator. Under transaction brokerage, buyers and sellers are entitled to impartiality, reasonable care and skill in carrying out services, providing accurate information and following strict procedures regarding disclosure and non-disclosure. It is highly inappropriate for Industry Members to enter into transaction brokerage under the following circumstances.

Family, colleagues, and self: If you represent a family member or a business associate, the personal relationship you have with that person may cause others to question your ability to be impartial. Likewise, you cannot represent yourself impartially. Regardless of how well you handle a transaction brokerage situation, a personal relationship with one party of the transaction or self representation leaves you and your conduct open to speculation by the other party.

Ongoing agency relationship: Any time you have an ongoing agency relationship with a client; do not enter into a transaction brokerage relationship with them. For example, if you have an agency relationship with a builder, a developer, or a repeat seller, you cannot be perceived to act impartially towards opposing parties to a transaction.

Novice seller or buyer: When representing an inexperienced seller or a first-time home buyer, entering into a transaction brokerage agreement is doing a huge disservice to that person. Novice sellers and buyers need your help, advice and support—services that cannot be provided under transaction brokerage.

Case Overview: Poor Paperwork and Advertising the Wrong Price

A complaint was submitted by a seller who was unhappy with the service received from the salesperson who listed their property. The complaint alleged a number of issues regarding the MLS® advertising of the property and signage, including advertising the wrong price, the wrong PID and as vacant land, not cottage/recreational. The seller said they were told by one industry member that the listing could not be found on MLS®, and that another industry member said the listing salesperson refused an offer on the property without their consent. The seller tried to have the listing cancelled, but the industry member and the broker refused to cancel the listing unless the seller paid $500 to the brokerage. As a result of these issues, the seller filed a complaint.

When the Commission investigated the complaint, the compliance investigator found that the listing salesperson did not use the wrong PID, the property had two PIDs. The use of one PID over another did not hinder an MLS® search, however, that the property was listed as vacant land, not cottage/recreational may have been why the industry member could not find it on MLS®. However, the property was listed as vacant land, and the seller signed an addendum stating the property was vacant land, so it was advertised according to the brokerage agreement.

The investigation revealed that the offer was presented to the seller and rejected by the seller. The investigation found poor paperwork, including the brokerage and the seller having different copies of the brokerage agreement, both copies were incomplete, and the seller never received a true copy of the agreement. The property was advertised in a real estate publication at the wrong price and the salesperson attempted to mislead the Commission regarding the real estate publication.

Results

The listing salesperson was charged with three violations of By-law 702, Article 11, for not getting contracts/amendments in writing, incomplete and ambiguous clauses, and not providing the seller with a true copy of the agreement; violating Bylaw 702, Article 15, for advertising the wrong price; and violating Bylaw 709 for advertising the property without a valid brokerage agreement.

Penalty

The salesperson was fined $750 for three violations of Bylaw 702, Article 11, and $400 for violating Bylaw 702, Article 15 and Bylaw 709.

Get it in Writing

Bylaw 702, Article 15, states “The industry member shall not advertise a property without the seller’s/ landlord’s written authority, nor shall the advertised or offered price of a property be other than that which was agreed upon with the seller/ landlord.”

In this case, the property was advertised without a valid brokerage agreement, a violation of Bylaw 702, Article 15.

When working with a seller, no advertising may commence until the Seller Brokerage Agreement is signed.

There is no grey area when it comes to advertising properties without written consent. If it happens and a complaint is filed, the advertisement is clear and undeniable evidence of a failure to comply with the bylaw.

Audit Overview: Brokerage Audits - Strike Three

Every year, the Commission compliance auditors conduct yearly trust audits on each brokerage in Nova Scotia. In addition to the trust audits, each brokerage is subject to a brokerage and trust audit every three years. At the end of an audit, the compliance auditors may meet with the broker to discuss any problem areas identified and address any questions the broker may have. Broker participation in an audit meeting is optional; however, the Commission strongly recommends brokers attend. This is a broker’s opportunity to address problem areas, ask questions, and discuss ways they can improve their audit results in the future. The compliance auditors follow up with a formal audit report, which reiterates their findings during the audit. Audits results fall in one of three categories: very good, good, and needs improvement. Any brokerage that receives three consecutive needs-improvement audits is subject to disciplinary action. The fine for three consecutive-needs improvement audits is $500 and the fine increases if the brokerage receives a fourth consecutive needs-improvement audit.

Three Consecutive Needs-Improvement Audits

Five brokers were fined $500 for three consecutive needs-improvement audits.

Needs Improvement

The following issues are commonly identified in needs-improvement audit findings: Poor paperwork Vague clauses Inappropriate cash backs Missing paperwork (Bylaw 621 lists the requirements) No terminations for fallen deals Trust funds released without written authority Transaction brokerage where inappropriate Failure to disclose licensed status and intent

Discipline Newsletter

IMPORTANT NOTICE: Audit and record keeping policies, and Part 6 of the Commission By-law have been updated as of January 2025. This newsletter references outdated content, in accordance with the versions in effect at time. For current information, click HERE.

November 2012

Volume 4 • Issue 2

About the Commission’s Discipline Process

The Nova Scotia Real Estate Commission is responsible for the administration of the Real Estate Trading Act and the Commission Bylaw. Part of that responsibility is dealing with public complaints about a brokerage or an industry member.

Complaints are investigated by the Commission’s compliance staff. The compliance staff prepares an investigation report for each case, which is then reviewed by the registrar. The registrar determines whether there was a breach of the Act or Bylaw and in cases where there was a breach, recommends charges and penalties. The cases are then presented to the Complaint Review Committee who may reject, amend or approve the registrar’s decision.

After the committee reviews the cases and makes any adjustments to the proposed charges, the industry member is sent a statement of allegations and a settlement agreement. If the industry member accepts a settlement agreement, the industry member must satisfy the penalty imposed.

If the industry member does not agree with a settlement agreement then the matter is referred to a full discipline hearing. After the Commission’s and witnesses’ evidence has been examined and cross examined at a hearing, the Hearing Panel decides whether the industry member is guilty of any of the charges brought forward at the hearing. The charges may include those proposed in the settlement agreement, but are not necessarily limited to those charges. If they are found guilty of any of the charges there is then an opportunity for both the Commission and the industry member to speak to appropriate penalties.

An industry member has the right to appeal the decision of the Hearing Panel to the Nova Scotia Court of Appeal, should they wish to and if there are grounds to do so.

Inside This Issue

About the Commission’s discipline process
Failure to discover facts and poor paperwork
Negotiating an expired agreement
Unlicensed trading, failure to supervise
Unprofessional conduct
Advertising a property without permission, providing false information during an investigation
Misleading advertising
Failure to disclose interest, failure to keep broker informed, poor paperwork and providing misleading information during an investigation
Lying about offers
Poor paperwork, poor understanding of agency, poor handling of a multiple offer
Brokerage audits—strike three and four

About This Newsletter

As per the Commission’s discipline publication threshold, Industry Members who receive a fine in excess of $500 have their names published in the newsletter that is sent out to all Industry Members. The names are also published in the newsletter that appears on the Commission website for a period of 30 days.

Case Overview: Failure to Discover Facts and Poor Paperwork 

The Commission received a complaint from first-time home buyers alleging their salesperson failed to provide them with a copy of the PCDS as required in the Agreement of Purchase and Sale. The buyers stated they didn’t know the document existed until it was delivered to them some 10 days after closing. When they received the PCDS, the form disclosed water problems in the basement. Two days later, the basement flooded with a foot and a half of water. The buyers said if they had received the PCDS when they were supposed to and knew of the water problems, they would have withdrawn their offer. During the investigation, the compliance investigator determined not only was the PCDS delivered after closing, but the transaction paperwork was riddled with errors including:

• The price was changed three times in the agreement of purchase and sale (APS), but the only signature acknowledging the change was the buyers’ industry member.
• The chattels were listed under additional terms and conditions, not under fixtures/ chattels/leased equipment.
• The agency section stated that the buyers’ salesperson was in an agency relationship with the seller, despite the fact that the buyer and the seller had independent representation.
• Neither the offer nor the counter offer adequately addressed the leased hot water heater.
• The counter offer signed by the seller in New Brunswick was witnessed by the buyers’ salesperson in Nova Scotia.
• The APS stated that PCDS was to be provided within 48 hours of acceptance.

Results

The salespeople violated By-law 702 Article 11 for poor record-keeping and By-law 702, article 10 for not having a signed PCDS. Their brokers violated Bylaw 704 for failing to provide an adequate level of brokerage supervision.

Penalty

Both salespeople were fined $400 for violating Bylaw 702 Article 10 and $400 for violating Bylaw Article 11.

Both brokers were fined $500 for violating Bylaw Article 704.

Obligation to Discover Facts

Bylaw 702, Article 10 states “The industry member has an obligation to discover facts pertaining to every property for which the industry member accepts an agency which a reasonably prudent industry member would discover in order to fulfil the obligation to avoid error, misrepresentation, or concealment of pertinent facts. The industry member shall disclose, in writing whenever possible, any known material latent defects to their clients or other industry members involved in a transaction.”

In this case, the buyers’ salesperson had an obligation to discover facts about the property and the sellers’ salesperson had an obligation to disclose all known latent defects. Delivering and receiving the PCDS within the terms of the agreement was part of that obligation.

Case Overview: Unlicensed Trading, Failure to Supervise

A written complaint was received from a broker alleging that a salesperson at another brokerage was trading in real estate without a licence due to failure to complete mandatory CPE courses. When the Commission investigated the case, the investigator discovered that the salesperson continued to negotiate a pending transaction while unlicensed and that the salesperson’s broker failed to ensure only licensed people traded in real estate at the brokerage.

Results

The salesperson violated Act Section 4 (1) for unlicensed trading and the broker violated Bylaw 704 (f) for failing to ensure the salesperson was licensed.

Penalty

The salesperson was fined $500 for violating Act Section 4 (1). The broker was fined $1000 for violating Bylaw 704 (f).

About Settlement Agreements

The first option for most industry members facing disciplinary action is a settlement agreement. In the majority of cases, the Registrar writes a proposed settlement agreement, which accompanies a statement of allegations (charge letter), that outlines the alleged violations and corresponding penalty. The settlement agreement, along with the investigation file, is presented to the Complaint Review Committee. The committee may approve, reject, or amend the settlement agreement.

If the committee accepts or amends the settlement agreement, the industry member can accept the agreement and satisfy the penalty or reject it and go to hearing. If the Complaint Review Committee rejects the settlement agreement, it may recommend that the matter be dealt with through a hearing.

No CPE Means No Trading

All industry members are required to complete mandatory and elective courses.

NSAR members can go to www.realtorlink.ca to view course status and register online. Nonmembers can call NSAR at 468-2515 or (800) 344-2001 to verify course status or to register.

If you do not complete your course requirements by June 30th, your licence is suspended until you do. As of July 1st, all your brokerage agreements must be assigned to other industry members at the brokerage, you must take down all your advertising, including websites and signage, and cease all trading activities.

Brokers and their industry members are responsible for ensuring continuing education requirements are completed by June 30th and that any industry member who does not have their courses completed, ceases trading on July 1st.

Case Overview: Unprofessional Conduct

The Commission received a complaint from sellers about the salesperson who represented the buyer on the sale of their property. The seller’s alleged the buyer’s salesperson entered their property without their consent prior to closing and permitted the buyers to have access to the property to store a trailer, deliver a fridge, and install a garage door opener. They further alleged that there was damage done to the property by the buyers.

The compliance investigator found the industry member did allow entry into the home prior to closing on two occasions, during which, the alleged activity occurred. The investigator also discovered the industry member did not disclose the buyer was a family member.

Results

The salesperson violated Bylaw 702, Article 35 twice for letting the buyer into the house without the seller’s knowledge; and violated Bylaw 702, Article 21 for failing to disclose the buyer was a family member.

Penalty

The salesperson was fined $750 for each violation of Bylaw 702, Article 35 ($1500) and $400 for violating Bylaw 702, Article 21.

Appointments Are Mandatory

Any time an industry member enters a property, an appointment must be made with the listing brokerage, or as instructed by the listing brokerage.

While it may be tempting, especially when a property is vacant like the one in this case, to save time and enter the property without setting up an appointment, it is prohibited.

Entering a property without permission is considered unprofessional conduct under the Act and the Bylaw, and is also trespassing, which is a summary offence under the Protection of Property Act.

Case Overview: Advertising a Property Without Permission, Providing False Information During an Investigation

The Commission received a written complaint from sellers about the conduct of the salesperson that listed their property. While the property was listed with the salesperson’s brokerage, the salesperson transferred to a different brokerage. The sellers alleged the salesperson pressured them to move their listing to the new brokerage. The sellers chose to terminate the listing, as per the brokerage’s policy when an industry member leaves the brokerage, and list with an unrelated brokerage. A week after the property was relisted, the sellers received a flyer in the mail showing their property listed by their former salesperson at the salesperson’s new brokerage.

When the Commission investigated the complaint, the compliance investigator found the salesperson did advertise the sellers’ property under the salesperson’s new brokerage after the listing was terminated. During the investigation, the salesperson blamed the Canada Post strike, however the strike was over before the flyer was even printed and it still does not explain the property being advertised with a brokerage that never held the listing agreement. The salesperson also provided false information to the Commission during the course of the investigation.

Results

The salesperson violated Bylaw 709 for advertising a property without the sellers’ permission; and Bylaw 816 for providing false information during an investigation.

Penalty

The salesperson was fined $400 for violating Bylaw 709 and $400 for violating Bylaw 816.

Brokerage Agreements Belong to the Brokerage, Not the Industry Member

When an industry member signs a buyer or a seller into a brokerage agreement, they are acting as agents of their brokers (hence the term “real estate agent”). The brokerage agreement is a contract between the consumer and the brokerage. Because the contract is between the consumer and the brokerage, industry members are not parties to the contracts. If an industry member leaves a brokerage, they can take listings with them only with the written permission of the brokerage that holds the listings and the seller.

Likewise, because the industry member is not a party to brokerage contracts, an industry member has no right to expect remuneration from any source but the brokerage with which they are licensed.

Case Overview: Misleading Advertising

A written complaint was received from a salesperson regarding the content of an advertorial published by a broker in a real estate publication. In the complaint, the salesperson alleged that the advertorial publicly discredited competitors by using derogatory and inflammatory language. The salesperson also alleged the advertorial discriminated against non-traditional business models.

Results

The advertorial contained false information, which violated Bylaw 702, Article 34.

Penalty

The broker was fined $500 for violating By-law 702, Article 34

What is Misleading Advertising?

The Commission receives complaints about advertisements that are perceived as misleading. In determining whether or not an advertisement is false or misleading, the Commission considers both the literal meaning of the advertisement and the general impression it creates. This is the same approach as that taken by the Courts and other law-enforcement organizations.

An advertisement is considered misleading when it makes a representation or claim that is false or misleading in a material respect. An advertisement may be considered misleading even if it is not demonstrated that a consumer was actually misled. It is only necessary to show that the advertisement is capable of misleading a reasonable consumer.

Case Overview: Failure to Disclose Interest, Failure to Keep Broker Informed, Poor Paperwork and Providing Misleading Information During an Investigation 

The Commission received a written complaint from buyers regarding the conduct of a salesperson in the attempted purchase of a property. The buyers claimed the salesperson acted unprofessionally, and mislead them in their attempted purchase of a house. The buyers also alleged the salesperson failed to disclose a financial interest in the property. The property was initially listed with the salesperson’s brokerage, but the salesperson terminated the listing. The buyers alleged they were not told it was a private deal until the offer was prepared. The deal fell, the salesperson refused to release the deposit, and the buyers had to go to court to get the deposit back.

When the complaint was investigated, the compliance investigator found that the salesperson did not disclose their interest in the property; the paperwork was very poorly prepared; and the salesperson did not keep their broker updated on his activities, which included cancelling the listing after entering into an agreement of purchase and sale. The salesperson also provided misleading information during the course of the investigation.

Results

The salesperson violated Bylaw 702, Article 21 for not disclosing a financial interest in the property; Bylaw 702, Article 11 for poor paperwork; Bylaw 705(d) for failing to keep the broker informed; and Bylaw 816 for providing misleading information during the course if the investigation.

Penalty

The salesperson was fined $500 violating Bylaw 702, Article 21; $500 for violating Bylaw 702, Article 11; $500 for violating By-law 705 (d); and $750 for violating Bylaw 816.

Do Not Lie, Mislead, or Conceal Information When Under Investigation

Bylaw 816 states “No industry member shall make or permit to be made any false or misleading statement in any investigational information required to be furnished under the Act, its Regulations or the Bylaw.”

If an industry member provides misleading or false information during the course of the investigation, the industry member can be charged with violating Bylaw 816 in addition to any other charges they may face. In this case, had the industry member been truthful during the investigation, they would not have received the $750 fine and stayed below the publication threshold.

Interest Must be Disclosed

Bylaw 702, Article 21 states “The industry member shall not present an offer or acquire an interest in property either directly or indirectly for themselves, any member of their immediate family or any entity in which the industry member has a financial interest, without making the industry member’s status as a licensed person and their intent for the purchase known to the seller in writing...”

A failure to comply with Bylaw 703, Article 21 is easily proven: either the disclosure is made in writing, which can be produced, or the disclosure was not made.

Keep Your Broker Informed

Industry members trade on behalf of the brokerage with which they are licensed. As such, it is necessary to keep the broker apprised of all trading activity. In this case, the salesperson cancelled the listing and engaged in a private trade without the broker’s knowledge or permission.

Case Overview: Lying About Offers

Buyers submitted a complaint about the salesperson that represented the seller on the purchase of their house. In the complaint, the buyers alleged that the salesperson lied to their industry member about the existence of a back-up offer. When the property was inspected, the inspection revealed the roof needed to be replaced, but because the buyers’ salesperson was told by the seller’s salesperson that there was a backup offer, they did not want to risk the seller terminating the agreement if they sought an amendment. In a later conversation with one of the sellers, the seller said there were no other offers on the property in the six weeks it was on the market.

When the complaint was investigated, the compliance investigator found that the salesperson lied to the buyer’s salesperson about the existence of a back-up offer. The investigation also revealed the salesperson lied to another salesperson about the existence of an accepted offer, deterring the second buyer from submitting an offer. The salesperson said the property was subject to an accepted offer when the counter offer wasn’t accepted until the following day.

Results

In their review of the Registrar’s decision, the Complaint Review Committee took the salesperson’s extensive licensing history and brokerage ownership into account. The committee found the salesperson violated Bylaw 702, Article 34 twice for lying about a back-up offer and an accepted offer; and violated Bylaw 702, Article 2 for failure to treat all parties to a transaction fairly.

Penalty

The salesperson was fined $750.00 for each violation of Bylaw 702, Article 34 ($1500) and fined $500.00 for violating Bylaw 702, Article 2.

The Difference Between Negotiating and Misleading

In this case, the salesperson intentionally mislead the buyers into believing there was a back-up offer on the property when none existed. This effectively prevented the buyers from seeking an amendment to remedy issues revealed in the property inspection. While this was beneficial to the salesperson’s seller clients, the salesperson telling another industry member with interested buyers that an accepted offer was in place when it wasn’t, was definitely not in the sellers’ best interest, soliciting the offer was. Industry members are prohibited from making false and misleading statements.

Industry members are also required to treat all parties to a transaction fairly. If you know another offer is being presented, you can say another offer is being presented. The statement is true and treats all parties fairly. You cannot imply that the offer will be accepted, nor can you, as in this case, invent an offer that doesn’t exist.

Case Overview: Poor Paperwork, Poor Understanding of Agency, Poor Handling of a Multiple Offer

The Commission received a written complaint from buyers who felt they were treated unfairly by the listing real-estate team for a property they purchased. The buyers submitted their first offer using the real-estate team. They were told that they had presented one offer to the sellers from buyers, which they had also prepared under transaction brokerage, and which had to be dealt with first before they could present the buyers’ offer. The first offer was countered, and expired. The buyers sought independent representation and presented a second offer, which was accepted. When the complaint was investigated, the following mistakes were identified:

• The team entered into a transaction brokerage with buyers without having a signed Buyer Designated Brokerage Agreement.
• The team, which had represented the sellers for four months, entered into transaction brokerage with buyers with whom they had no previous relationship. This was inappropriate because of the lack of an existing agency relationship with the buyers. The team could not act or be perceived to act as an impartial facilitator.
• The paperwork contained a number of mistakes, including missing signatures, vague clauses and initials.
• One offer prepared on the property included the words “Back Up offer” in two places, but no formal clause to that effect.
• One counter offer contained the clause “The signature of [one of the sellers] will be obtained within 24 hours of an accepted offer.”

Results

The team lead violated Bylaw 702, Article 2 for not treating all parties to the transaction fairly; Bylaw 702, Article 3 for entering into transaction brokerage where it was inappropriate to do so; and violated Bylaw 702, Article 11 for poor paperwork.

One of the team members violated Bylaw 702, Article 2, for not treating all parties to the transaction fairly; and Bylaw 702, Article 3 for entering into a transaction brokerage without having a Buyer Designated Brokerage Agreement signed. The team’s broker violated Bylaw 705 (b) and (c) for failure to supervise.

Penalty

The team lead was fined $500 for each violation ($1500).

The team member was fined $500 for each violation ($1000).

The broker was fined $500.

When Does an Offer Become a Back-up Offer?

An offer submitted on a property subject to an accepted agreement, is prepared and submitted just like any other offer. If the sellers decide to accept the offer as a backup offer, the sellers’ industry member prepares a counter offer stating that the offer is conditional upon the first offer not succeeding.

One Signature When Two are Required is a Verbal Offer

In this case, a counter offer contained the clause “The signature of [one of the sellers] will be obtained within 24 hours of an accepted offer.” This is, in essence, a verbal offer because signatures of both sellers are required for a contract to be valid. Aside from the legislative requirement to have agreements in writing, a clause like this is especially problematic because what happens if the signature cannot be obtained within the time allotted? Handled correctly, the offer is amended to provide sufficient time to obtain the seller’s signature.

Audit Overview: Brokerage Audits - Strike Three and Four

Every year, the Commission compliance auditors conduct yearly trust audits on each brokerage in Nova Scotia. In addition to the trust audits, each brokerage is subject to a brokerage and trust audit every three years. At the end of an audit, the compliance auditors may meet with the broker to discuss any problem areas identified and address any questions the broker may have. Broker participation in an audit meeting is optional; however, the Commission strongly recommends brokers attend. This is a broker’s opportunity to address problem areas, ask questions, and discuss ways they can improve their audit results in the future. The compliance auditors follow up with a formal audit report, which reiterates their findings during the audit. Audits results fall in one of three categories: very good, good, and needs improvement. Any brokerage that receives three consecutive needs-improvement audits is subject to disciplinary action.

Three Consecutive Needs-Improvement Audits

Two brokers were fined $500 for three consecutive needs-improvement audits.

Four Consecutive Needs-Improvement Audits

The broker was charged with violating By-law 704 (d) and fined $1000.

Needs Improvement

The following issues are commonly identified in needs-improvement audit findings:

• Poor paperwork
• Vague clauses Inappropriate cash backs
• Missing paperwork (Bylaw 621 lists the requirements)
• No terminations for fallen deals
• Trust funds released without written authority
• Transaction brokerage where inappropriate
• Failure to disclose licensed status and intent

Disciplinary Newsletter

IMPORTANT NOTICE: Audit and record keeping policies, and Part 6 of the Commission By-law have been updated as of January 2025. This newsletter references outdated content, in accordance with the versions in effect at time. For current information, click HERE.

April 2012

Volume 3 Issue 1

About the Commission’s Discipline Process

The Nova Scotia Real Estate Commission is responsible for the administration of the Real Estate Trading Act and the Commission Bylaw. Part of that responsibility is dealing with public complaints about a brokerage or an industry member.

The Commission investigates these complaints and if there is evidence to support a breach of the Act or Bylaw, charges are laid against the industry member. If there is insufficient evidence of a breach, or no breach occurred, the case is dismissed. The first option for most industry members facing disciplinary action is a settlement agreement.

If the Commission and the industry member agree to deal with the matter through a settlement agreement, the industry member must satisfy the penalty imposed.

If the industry member does not agree with a settlement agreement then the matter is referred to a full discipline hearing. After the Commission’s and witnesses’ evidence has been examined and cross examined at a hearing, the Hearing Panel decides whether the industry member is guilty of any of the charges brought forward at the hearing. The charges may include those proposed in the settlement agreement, but are not necessarily limited to those charges. If they are found guilty of any of the charges there is then an opportunity for both the Commission and the industry member to speak to appropriate penalties.

An industry member has the right to appeal the decision of the Hearing Panel to the Nova Scotia Court of Appeal, should they wish to and if there are grounds to do so.

Inside This Issue

About the Commission’s discipline process
Failure to document cash back, licence, and intent
Unprofessional conduct
No agreement in place
Advertising violations
Failure to provide duty of care
Failure to provide duty of care and supervision
Poor paperwork, verbal agreements, failure to supervise
Violating client confidentiality and poor paperwork
Failure to disclose licence and intent on private purchases
Breach of trust
Brokerage audits—strike three (and four) and paying unlicensed entities

About This Newsletter

As per the Commission’s discipline publication threshold, Industry Members who receive a fine in excess of $500 have their names published in the newsletter that is sent out to all Industry Members. The names are also published in the newsletter that appears on the Commission website for a period of 30 days.

Case Overview: Failure to properly document cash back, licence, and intent

The Commission received a complaint from a seller about a salesperson who personally prepared and submitted an Agreement of Purchase and Sale (APS) to purchase the seller’s property. The seller felt like the salesperson was trying to take advantage of them. The offer contained an untitled addendum requesting a large cash back upon closing. The APS contained no reference to the untitled addendum. The salesperson disclosed that they were a “licensed REALTOR®” and did not disclose their intended use of the property. 

Results

The salesperson was charged with violating Bylaw 702, Article 11 for failing to properly document the addendum on the APS and charged for violating Bylaw 702, Article 21 for failing to make proper disclosures of license status and intent. The salesperson was offered and rejected a settlement agreement and the matter went to hearing. The hearing panel found the salesperson guilty on both charges. In coming to a decision the hearing panel factored the salesperson’s seven years experience in the industry, as well as the importance of an industry member’s adherence to the rules when purchasing property on their own behalf so that there is no perception of trying to take advantage of the public.

Penalty

The salesperson (now broker) was fined $600 for violating Bylaw 702, Article 11, $400 for violating Bylaw 702, Article 21, and ordered to pay full hearing costs of $5605.26. In awarding hearing costs to the Commission, the hearing panel stated that the costs should not be borne by all industry members; as an experienced salesperson who violated the Bylaw, they are responsible for their own actions; it is notthe responsibility of the industry to pay for the mistakes of the salesperson

About Settlement Agreements

The first option for most Industry Members facing disciplinary action is a settlement agreement. In the majority of cases, the Registrar writes a proposed settlement agreement, which outlines the alleged violations and corresponding penalty. The settlement agreement, along with the investigation file, is presented to the Complaint Review Committee. The Committee may approve, reject, or amend the settlement agreement.

If the Complaint Review Committee accepts or amends the settlement agreement, the industry member can accept the agreement and satisfy the penalty or reject it and go to hearing. If the Complaint Review Committee rejects the Settlement Agreement, it may recommend that the matter be dealt with through a hearing.

Misnomer: Licensed REALTOR®

Industry Members are licensed by the Commission as salespeople, associate brokers, managing associate brokers, approved sales corporations and brokers. Industry Members are not “licensed REALTORS®”.

Being a REALTOR® means you are a member the Canadian Real Estate Association (CREA) at a national level and the Nova Scotia Association of REALTORS® (NSAR) or the Annapolis Valley Real Estate Board (AVREB) at a provincial level. CREA and its provincial counterparts are a professional membership organization and participation is voluntary.

CREA does not grant licenses, and you can be licensed to sell real estate without being a CREA member.

Case Overview: Unprofessional Conduct

The Commission received a complaint from a broker’s business partner alleging that the broker forged their signature on a real estate document. When the Compliance Investigator looked into the complaint, the broker admitted that they did forge the signature and then had a salesperson employed by the brokerage witness the signature.

Results

The broker did forge the signature. The Complaint Review Committee also found the industry member who witnessed the forged signature at fault. The purpose of having signatures witnessed is so if questions are raised regarding the signature on a document, a witness may be called upon to testify that the individual whose name is on the document signed the document in their presence.

Penalty

The broker was fined $2,000 and received a 30-day licence suspension for violating Act Section 22.

The salesperson was fined $400 for violating Bylaw 702, Article 2.

Updated Penalty

When a licence is suspended, one of the requirements is to cease all advertising. The broker did not adequately comply with this requirement. As a result, the broker’s licence was suspended for an additional 30 days.

When Can You Sign for Someone Else?

The only time you can sign for someone else is when you have a power of attorney granting you that authority.

A power of attorney is an agency agreement where a person is authorized to execute documents under seal on behalf of another party. The power of attorney must be in writing and the authority granted is limited to the terms of the document.

Industry Members who have been granted power of attorney, or are working with a consumer who has been granted power of attorney need to ensure power of attorney signatures are executed properly. As an Industry Member signing on behalf of another person, you sign your own name followed by “as power of attorney” or “POA”. When a consumer is signing on behalf of another person, the same process is followed. If two signatures are required, for example, a couple, the person with power of attorney signs their own name (for their signature) and then signs their own name again followed by “as power of attorney” or “POA”. A copy of the power of attorney document is retained in the transaction file.

Signing someone else’s name is fraud, which is a criminal offense.

Case Overview: No Agreement in Place I

A broker advertised a property in the Real Estate Book without a written brokerage agreement in place. The seller complained to the Commission after viewing the property in the publication. The broker explained the advertisement appeared as a result of an error in judgment.

Results

The broker violated Bylaw 702, Article 15, by not having a signed Seller Brokerage Agreement in place.

Penalty

The broker was fined $1,000 for violating Bylaw 702, Article 15.

Case Overview: No Agreement in Place II

A broker placed a property on the MLS® system without a written brokerage agreement in place. The sellers complained to the Commission after viewing the property on realtor. ca. Upon investigation, the broker blamed their administrator for placing the property on the MLS® system in error.

Results

The broker violated Bylaw 702, Article 15, by not having a signed Seller Brokerage Agreement in place. The Registrar and Complaint Review Committee also found that blaming the administrator for the error was irrelevant because the broker is ultimately responsible for the activities of the brokerage, including ensuring all brokerage agreements are in writing.

Penalty

The broker was fined $1,000 for violating Bylaw 702, Article 15.

Case Overview: No Agreement in Place III

A salesperson showed a buyer relocating to Nova Scotia several properties; however, no Buyer Brokerage Agreement was signed. The buyer was unhappy with the services being provided and opted to work with another brokerage. When the buyer contacted the salesperson to inform them their services were no longer needed, the salesperson allegedly threatened to smear the buyer’s reputation within their professional industry here in Nova Scotia. The industry member also told the buyer that they would be billed $2,000 for real estate services and if it wasn’t paid, the salesperson would contact the buyer’s new employer for the money. The buyer submitted a complaint to the Commission.

Results

The salesperson violated Bylaw 702, Article 35 for threatening to call the buyer’s new employer; the salesperson violated Bylaw 715 for attempting to claim commission with no written agreement.

Penalty

The salesperson was fined $500 for violating Bylaw 702, Article 35, and $400 for violating Bylaw 715.

Case Overview: No Agreement in Place IV

A written complaint was received against a salesperson with whom the complainants had their property listed. The salesperson changed brokerages and the sellers claim the salesperson pressured them into moving their listing to the new brokerage. As per the brokerage policy, they opted to terminate the Seller Brokerage Agreement and sign with a different brokerage. Shortly thereafter, the sellers received a flyer in the mail advertising their property as listed by their former salesperson at the salesperson’s new brokerage. During the course of the investigation, the salesperson provided misleading information to the Commission.

Results

The salesperson violated Bylaw 709 by advertising a property without written permission and violated Bylaw 816 by providing misleading information to the Commission during the course of the investigation.

Penalty

The salesperson was fined $400 for violating Bylaw 709 and $400 for violating Bylaw 816.

Get it in Writing

Bylaw 702, Article 15, states “The industry member shall not advertise a property without the seller’s/ landlord’s written authority, nor shall the advertised or offered price of a property be other than that which was agreed upon with the seller/landlord.”

In both of these cases, properties were advertised without the written consent of the seller, a violation of Bylaw 702, Article 15. When working with a seller, regardless of an industry member’s desire to market the property as quickly as possible, no advertising may commence until the Seller Brokerage Agreement is signed. There is no grey area when it comes to advertising properties without written consent. If it happens and a complaint is filed, the advertisement is clear and undeniable evidence of a failure to comply with the bylaw.

When Can You Make a Claim for Commission?

Bylaw 715 sets out the requirements to make a claim for commission.

(a) A brokerage may make claim for a commission when one of the following is in place, which specifies the commission to be paid:

(i) a Seller Brokerage Agreement;
(ii) an Agreement of Purchase and Sale;
(iii) a Buyer Brokerage Agreement;
(iv) a commission sharing agreement; or
(v) some other form of written agreement.

Unless one of these five requirements is met, there is no claim for commission.

Case Overview: Advertising Violations I

The Commission sent a salesperson written notice to remove sold properties advertised on their website. The industry member had every property they ever sold, with sold prices, advertised on their website. Some of the sold properties dated back to 2001. The salesperson contacted the Commission and stated their website would be corrected. Some months later, the website still wasn’t corrected. In addition, the salesperson had changed brokerages five months previously, but never updated the website to reflect the new brokerage.

Results

The salesperson violated Bylaw 709 for advertising properties without written authorization and violated Bylaw 705 for trading in the name of a brokerage other than the one with which they were licensed.

Penalty

The salesperson was fined $400 for violating Bylaw 709 and received a letter of reprimand for violating Bylaw 705.

Case Overview: Advertising Violations II

The Commission received a written complaint from a property owner about a photo of his vacation property appearing in a listing for a different plot of land. The owner was concerned that trespassing and theft may occur on his property as a result of the misleading nature of the listing cut. Based on the scene depicted in the photo, the owner thought it was very likely that the salesperson trespassed on the property while taking the photo. They contacted the salesperson and requested the photo be removed; however the salesperson refused, stating it was a picture of the lake, not the owner’s property. It was not until after the owner complained to the Commission that the salesperson removed the photo from the listing.

Results

The salesperson, licensed since 2001, should have known better than to publish a photo of a property that was not listed. The photo clearly depicted the complainant’s property, while the listed property was a lot on the other side of the lake.

Penalty

The salesperson was fined $400 for breaching Bylaw 708 for misleading advertising.

Advertising Sold Properties

Industry members can advertise a property as sold after all the conditions are met, but can only advertise the property (as sold or otherwise) until the property closes or the contract expires.

The reason for this is once the closing occurs or the date in the contract expires, the brokerage no longer has the authority to advertise the property. The seller authorizes the brokerage to advertise the property in the Seller Brokerage Agreement. When the Seller Brokerage Agreement expires, that authority to advertise ends. Beyond this point, sold information may be used for CMAs and statistical purposes only, as stipulated in clause 5.1 of the Seller Brokerage Agreement, unless additional written permission is obtained.

Industry Members who wish to advertise a property as sold, must have the buyer’s written permission because the buyer is now the property owner and the only one who can authorize it being advertised.

To advertise the sold price of the property, written permission must be obtained from both the buyer and the seller.

Case Overview: Failure to Provide Duty of Care I 

The Commission received a written complaint from a former industry member about a salesperson with whom they entered into a customer relationship to purchase a house. The former salesperson alleged that the salesperson verbally extended the financing clause in the APS, but failed to obtain the required written extension. The salesperson was aware that the buyer was having an issue satisfying financing and instead of making all parties sign an amendment to extend, they agreed to extend the financing clause verbally. On the day of the extended financing clause deadline, the buyer was unable to obtain satisfactory financing and requested the transaction be terminated. The industry member made the buyer obtain a letter from the financial institution stating that financing was not approved. The seller refused to sign the termination form and also refused to release the $5000 deposit, citing insufficient notice of termination.

When the Commission investigated the complaint, the investigator also noticed the salesperson made the following disclosure on the APS: “the buyer is a registered Realtor with NSAR”. The investigator also discovered that the salesperson’s broker failed to respond to numerous phone calls and emails from the buyer.

Results

The salesperson violated Bylaw 702, Article 11 on two counts; one for not extending the financing clause with a written amendment and one for making erroneous disclosures on the APS. The salesperson was wrong to request a letter of failed financing when it was not stipulated in the contract and therefore not required. The Committee found the broker at fault for failing to properly oversee the activities of the industry members employed by the brokerage.

Penalty

The salesperson was fined $400 for each violation of Bylaw 702, Article 11 ($800 in total). The salesperson was also given a warning for requiring a letter of failed financing.

The broker was fined $500 for violating Bylaw 703.

Case Overview: Failure to Provide Duty of Care II

The Commission received a complaint from a buyer who claimed a salesperson did not represent their best interests on the purchase of a property. The buyer complained after the property they purchased without viewing required extensive repairs. When the investigator interviewed the salesperson, the salesperson said the buyer had 44 days to conduct a property inspection written into the APS, but chose to forego an inspection. When the investigator reviewed the transaction file, they found the following issues:

The salesperson was in an agency relationship with the seller. After receiving emails from the buyer about the subject property only, they had the buyer sign a Buyer Brokerage Agreement and then entered into transaction brokerage the same day. This put both the seller and buyer in a no representation relationship.

• The agency section of the APS was completed incorrectly.
• The 44-day timeline to conduct a property inspection was actually 14 days. The industry member never wrote an amendment to make it 44 days.
• The buyer brokerage agreement stated the buyer would pay a flat fee of $1,850 if the seller did not pay a cooperating commission. If there was cooperating commission above $1,850, the excess would be paid to the buyer. The brokerage charged the seller six per cent commission, the full remuneration stated in the Seller Brokerage Agreement, and also charged the buyer $1,850.

Results

The Registrar and the Complaint Review Committee found it unfortunate that the buyer’s property required extensive repairs, however, it was the buyer’s decision not to conduct a property inspection. The Registrar found, and the Committee agreed, that both the salesperson and the broker failed to carry out their duties as required under the Act and Bylaw.

Penalty

The salesperson was fined $400 for violating Bylaw 702, Article 2 and $400 for violating 702, Article 11.

The broker was fined $500 for violating Bylaw 703, (b).

Verbal Agreements Do Not Protect Anyone, Including You

Bylaw 702, Article 11, requires all agreements regarding real estate transactions be in writing in clear and understandable language, expressing the specific terms, conditions, obligations and commitments of the parties to the agreement.

The reason industry members are required to ensure all agreements are in writing is to protect all parties to the transaction. In this case, the financing clause in an agreement of purchase and sale was verbally extended, but never put into a written amendment. When the buyer tried to terminate before the last verbal extension, the seller refused, pointing to the expired financing clause in the agreement and the lack of written documentation to say otherwise. Had the industry members ensured the financing clause extension was in writing, the deal likely would have terminated without issue.

Raising the Bar Course Raised Everyone’s Bar

In the 2009/2010 licensing cycle, the broker’s mandatory course was “Raising the Bar.” This course was intended to inform the participants on what resources are available to them, as well as address the most common administration and supervision problems experienced in real estate brokerages. Raising the Bar was implemented because of the diverse broker-education background of industry members with broker designations. The goal of this course was to clearly communicate the Commission’s expectations of broker-level industry members.

This enables the Commission to raise the standards of practice in the industry to where they should be, as well as act as a cutoff to the many excuses often made when issues arise.

The 2009/2010 licensing cycle ended on June 30th, 2010. Since that time, brokers have been held to a higher standard.

Case Overview: Failure to provide Both Duty of Care and Supervision

The Commission received a complaint from out-of-province buyers against the salesperson who represented them on the failed purchase of a property. The buyers were upset because the salesperson told them they had an accepted offer, at which time they stopped searching for a property and returned home. The buyers’ salesperson was also the listing salesperson. After 12 days of no contact with the buyers, the salesperson told the buyers that their offer had been a backup offer and the sellers had accepted a previous offer. During the investigation, the investigator found extensive Bylaw violations on the part of the salesperson and the broker, including:

• A counter offer prepared on an offer that was rejected
• Treating a rejected counter offer as open when it was superseded by a new offer
• Failing to advise the seller of a back up offer until after a second offer was verbally rejected
• An accepted counter offer with the salesperson signing on behalf of one of the buyers without power of attorney
• Failing to provide the complainants with true copies agreements
• Providing the complainants with copies of an unsigned Agreement of Purchase and Sale with the words “back up offer” hand written on it and initialed and dated by the salesperson
• Providing the Commission with a different copy of the complainants’ offer than the one provided to the buyers
• Poor paperwork, including:
  • An addendum and amendment to the listing agreement signed by only one of the sellers
  • Clauses struck but not initialed
  • Agency section completed incorrectly on the complainants’ offer
  • Counter offer contained only the names of the buyers
  • Poor clause writing

Results

The salesperson violated Bylaw 702, Articles 2, 11, 12, Bylaw 712, and Bylaw 721 numerous times. The broker violated Bylaw 703 (b), (c), (e), and 704 (a), for failure to properly supervise.

Penalty

The salesperson was fined $2000 and required to complete the salesperson licensing course and pass the exam to remain licensed. The salesperson terminated their licence on December 31, 2011.

The broker was fined $2000.

Brokers are Expected to Know the Rules

In this case, both the salesperson and the broker were subject to serious penalties because of the sheer number of mistakes in one transaction.

As mentioned previously, the standard to which an industry member is held, is that of a reasonably prudent and knowledgeable industry member acting under the same circumstances. In this case, is it expected that reasonably prudent and knowledgeable industry member would know how to conduct a multiple-offer transaction. Further to that, if the industry member had questions about handling a multiple-offer, it is expected that the broker, who is responsible for overseeing all trading activities of the brokerage, possesses the knowledge and skills to correctly answer those questions.

Case Overview: Poor Paperwork, Verbal Agreements, Failure to Supervise

The Commission received a written complaint from a buyer who alleged that the listing salesperson failed to notify their seller clients of the buyer’s dissatisfaction with the well-water test within the required time frame. The investigation into the complaint revealed that the Agreement of Purchase and Sale was amended to address the well-water issue with the clause “Seller agrees to rectify volume and bacteria problems with the well prior to closing.” The sellers accepted the amendment, however then discovered a new well had to be drilled to remedy the situation. The seller refused to drill a new well unless the buyers shared half the costs; however the APS was never amended. The buyer refused and requested the transaction be terminated. The buyer’s salesperson provided written notice of termination one day before the closing date. Despite the termination, both parties continued verbal negotiations as if the transaction was still in play for an additional two months before the buyer requested the return of their deposit, which the seller refused. At this point the buyer submitted a complaint to the Commission.

Results

Both salespeople involved in this transaction violated Bylaw 702, Article 11 for failing to ensure that agreements were in writing, and clearly outlined the terms and conditions. Both brokers were at fault for failing to adequately supervise the activities of the salespeople in their employ.

Penalty

Both salespeople were fined $400 for violating Bylaw 702, Article 11.

Both brokers were fined $500 for violating Bylaw 704.

A Terminated Agreement is a Dead Agreement

In this case, both salespeople relied heavily on verbal agreements during the course of the failed transaction and continued to rely on verbal agreements for two months after the Agreement of Purchase and Sale was terminated.

The reliance on verbal agreements while the transaction was in play is a violation of Bylaw 702, Article 11. The reliance on verbal agreements after the agreement was terminated is a failure to understand and comply with the basic principles of contract law. When a contract is terminated, it no longer exists. You cannot negotiate terms on something that does not exist.

Case Overview: Violating Client Confidentiality and Poor Paperwork

The Commission received a written complaint from a seller who was very upset with the managing associate broker that listed their property. The seller alleged the managing associate broker told the buyers, who were customers of the brokerage that the seller was going through foreclosure proceedings. When the Compliance Investigator looked into the complaint, they found the managing associate broker did in fact tell the buyers that the seller was in foreclosure and moreover, that the information was incorrect. The seller was at risk of foreclosure, but no proceedings had commenced. Eventually the transaction fell. When the transaction file was reviewed, the Compliance Investigator noted a number of issues, including failing to:

• record the property type on the APS
• record the total number of pages
• complete the buyer portion of agency relationships section
• obtain the buyer’s signature on the PCDS
• amend to the Seller Brokerage Agreement to reflect an agreed upon commission reduction
• obtain a price reduction in writing before telling the buyers the price was reduced

Results

The managing associate broker violated Bylaw 702, article 37, for sharing confidential client information; Bylaw 702, article 11 for failing to amend the SBA before informing buyers of a price reduction; and Bylaw 702, article 11 for poor record keeping.

Penalty

The managing associate broker was fined $1,000 and required to complete the agency module of the salesperson licensing class for violating Bylaw 702, article 37 and fined $400 for each violation of Bylaw 702, article 11.

Agency Relationship Obligations

Undivided Loyalty: An Industry Member must act in the client’s best interests. An Industry Member must put the client’s interests ahead of anyone else’s, including their own.

i>iReasonable Care and Skill: It is expected that Industry Members will perform at a level reasonably expected of competent real estate professionals. An Industry Member is not expected to have expertise beyond this, unless the Industry Member implies or states such expertise.

Obey Instructions: The Industry Member must obey the client’s lawful instructions and not act beyond the authority granted by the client. Confidentiality: All information received from a client or obtained as a result of representing that client must be kept confidential.

Full Disclosure: An Industry Member must disclose to the client all known material facts which may affect or influence the client’s decision in the transaction.

Full Accounting: An Industry Member is accountable for all money or property entrusted to the Industry Member by the client.

Case Overview: Failure to Disclose Licence and Intent on Private Purchases

The Commission received a complaint about a salesperson purchasing properties without putting the trades through the brokerage and for failing to disclose their status as a licensed salesperson and their intentions for the property. When the Commission investigated the complaint, the investigator determined that the salesperson did purchase several properties privately, however the Real Estate Trading Act exempts property owners from its authority. The investigator did find the salesperson failed to make the appropriate disclosures. The salesperson’s defense was that they were new to the industry and did not know better.

Results

The salesperson’s new-to-the-industry defense did not hold up. The properties were purchased without proper disclosure in 2010, some three years after the salesperson was first licensed.

Penalty

The salesperson was fined $400 for violating Bylaw 702, Article 21.

Responding to an Investigation Inquiry

As per Bylaw 809, the industry member subject to the complaint is required to respond to the complaint; however the investigator typically needs more information than what the industry member can provide. For example, if there are two industry members involved in the trade, the investigator may ask the industry member not subject to the complaint to provide information. Depending on the allegations, the investigator may need information from an industry member who may have shown the property or had some other involvement with the industry member subject to the complaint.

As per Bylaw 810, when responding to the complaint, the response must be in writing, unless the investigator instructs otherwise. The industry member must respond substantively to the complaint. This means the response must be thorough and answer all of the questions asked. The response must be provided as promptly and in any event, no later than the date set by the investigator.

Acting as a Principal in a Real Estate Transaction

When an industry member acquires real estate, extreme care must be taken to ensure that an industry member’s duty is not put into conflict with their interest as a principal in the transaction (e.g., as a buyer) Act Section 38 requires the industry member to disclose their status as a licensed person as well as their intentions for the property.

The obligation created by Section 38 is that any real estate industry member involved, directly or indirectly, in the acquisition of real estate must make written disclosure regardless of any relationships that exist and regardless of whether the trade is conducted through a brokerage or a private sale.

While the Act exempts property owners from its authority, it is important for all industry members to know that their errors and omissions insurance exempts personal transactions. Any industry member who purchases or sells their own property is not covered under errors and omissions insurance should something go wrong.

Case Overview: Brokerage Audit - Breach of Trust

At the beginning of a routine audit, the broker told the Compliance Auditor they had accidentally made two electronic transfers from the trust account. The broker explained the wrong account was selected when performing online transfers. When the auditor examined the trust account, the two electronic transfers were identified along with 14 trust cheques written to cover business operating expenses and, ultimately, a $4000 trust shortage. The auditor also noted the broker was not updating the trust records. The monthly trust account liability listing was inaccurate, reflecting the amount that should have been held in trust, not the diminishing balance, as shown on her monthly bank statements, which resulted in a $4000 shortage. Additionally, in instances where the brokerage had taken bona fide trust funds, the credits and debits were documented on the trust account control ledger but the errors were not. All cheques were written from the same cheque book which was clearly marked “trust”, as were the trust cheques.

Results

The Compliance Auditor ordered the broker to immediately replace the missing funds. The Registrar ordered the broker to remit all trust funds held by the brokerage to the Commission to be held in trust, and prohibited the brokerage from holding trust money on future transactions until the matter was investigated. The broker was charged with violating Real Estate Trading Act section 22(1)(a).

Penalty

The broker received a six-month licence suspension, a $2,500.00 fine, and to be licensed in the future, may apply for an associate broker or a salesperson licence only.

Trust Money

When a brokerage accepts a deposit, the money is held in trust and the broker becomes the trustee of those funds.

As a trustee, the broker has responsibilities under the Real Estate Trading Act, the Commission Bylaw, and the Trustee Act.

As the name trustee implies, a broker is placed in a position of trust every time a deposit is received. When funds are improperly disbursed from the trust account, a breach of trust occurs. As demonstrated in this case, breaches of trust are taken very seriously.

Unprofessional Conduct, Act Section 22

22. (1) Unprofessional conduct is a question of fact, but any matter, conduct or thing, whether or not disgraceful or dishonorable, is unprofessional conduct within the meaning of this Act if it is (a) harmful to the best interests of the public, licensed persons or the Commission.

Case Overview: Brokerage Audit - Strike Three (and Four)

Every year, the Commission compliance auditors conduct yearly trust audits on each brokerage in Nova Scotia. In addition to the trust audits, each brokerage is subject to a brokerage and trust audit every three years. At the end of an audit, the compliance auditors may meet with the broker to discuss any problem areas identified and address any questions the broker may have. Broker participation in an audit meeting is optional, however, the Commission strongly recommends brokers attend. This is a broker’s opportunity to address problem areas, ask questions, and discuss ways they can improve their audit results in the future. The compliance auditors follow up with a formal audit report, which reiterates their findings during the audit. Audits results fall in one of three categories: very good, good, and needs improvement. Any brokerage that receives three consecutive needs-improvement audits is subject to disciplinary action.

Penalty

In 2011, three brokerages were fined $500 for three consecutive needs-improvement audits. One brokerage was fined $1,000 for four consecutive needs-improvements audits.

Case Overview: Brokerage Audit - Paying Unlicensed Entities

During the course of 2011 audits, two brokerages were identified for paying commissions to unlicensed corporations. While the Act was changed in the spring of 2011 to provide for incorporation, the ability to incorporate was not offered until March 1, 2012.

Penalty

Two brokers were each fined $1,000 for violating Bylaw 715 (c).

Needs Improvement

The following issues are commonly identified in needs-improvement audit findings:

• Poor paperwork
• Poor clauses
• Inappropriate cash backs
• Missing paperwork (Bylaw 621 lists the requirements)
• No terminations for fallen deals
• Trust funds released without written authority
• Transaction brokerage when inappropriate
• Failure to disclose licensed status and intent